With the increased pressures to provide detailed and accurate leasing data brought on by the introduction of AASB 16/IFRS 16 a few years back, coupled with the lease negotiations and changing agreements brought on by the recent lockdowns, it’s never been more challenging to manage the reporting complexity of your lease portfolio.
Reverting to good, old fashioned excel spreadsheets and or relying on property and leasing managers to manually maintain data on server-based applications are the go-to methods for many as the means of handling your real estate portfolio.
But at what cost?
Manual entry mistakes, information risk in manual data storage, hours of time wasted in inefficient processes are just some of the hidden costs. Our research confirms lease management is costing you thousands more than you thought.
In the past, turning to software to assist in lease management was expensive, difficult and non-viable for businesses with less than 1,000 leases. However, with specialist lease management systems now available outside a full ERP system, they are offering businesses a way to better manage leasing data while also saving time and reclaiming lost funds.
Hidden costs of lease management add up
The cost of an employee to manage and run manual records can seem like the most cost-effective way to do things – on the surface. But once you gain insight into the hidden costs associated with poorly managed leasing data, the costs start increasing dramatically.
Inaccurate rental charges
Server-based management systems that require manual entry and singular administrator access provides many complications for financials and payments. Inability to track invoices or access payment information, as well as the high risk of human error, sees many lease payments made multiple times or for the wrong amounts. Considering this could be occurring with every lease you hold; the cost of overpayments could be astronomical.
Poor access to lease management information and lack of alerting capabilities increases the risk of a missed option, which in turn increases your leasing costs. A missed option can lead to a lost lease, a significant rent increase or even a lawsuit. Recently, one RSA based-business that missed an option spent close to $7 million dollars on legal costs to retain their lease.
Utilising irrelevant data
When data is being shared, changed and duplicated in manual systems and spreadsheets, there is no way to tell if the data you’re using is correct or up to date. This leads to, among other things, an inability to correctly analyse site performance and lease return – resulting in holding onto sites that are financially unviable, or failing to take up leasing opportunities that offer a good return.
It’s important to note these costs aren’t one off – they compound with every lease and every lease period, leading to thousands and thousands of dollars worth of overpayments, costs and missed opportunities.
Failing to recognise lease management inefficiencies and inaccurate data as contributing costs to your lease management can lead to ongoing unnecessary expenses year after year, for the life of your business.
Access and accuracy go hand in hand
The deception around the cost of lease management stems primarily from an inability to access data, and is compounded by the poor accuracy of the data available.
As poor accessibility and control over data directly contributes to poor accuracy, the whole system continues to work against itself – a constant cycle, costing you large sums of money with every rotation.
To be able to rectify these issues and achieve a more cost-effective and successful approach to lease management, accuracy and access to data is paramount.
So, what does accurate and accessible data look like?
- Appropriate accessibility requires all necessary parties to access data from anywhere at any time, removing the risks of compromised data reliability, as all parties are working off a single source of truth. This cannot be achieved through a manual system, where access to leasing data is reliant on the sending and sharing of one (or multiple) constantly edited spreadsheets.
- As previously mentioned, accuracy relies heavily on good accessibility. A single source of truth for all leasing data ensures that nothing is being changed without others knowledge. All data is updated and accessible in real-time and can be used for reporting and analysis to improve portfolio performance and recognise cost saving opportunities.
- Compliance is impossible to achieve without detailed, accurate data. The recent standard changes threaten to increase the workload of property managers and accounting teams, potentially requiring more staff – increasing business costs. When there is a single source of accurate data, there is no need for more employees to retrieve and verify data.
These capabilities can’t be achieved through manual systems. Only web-based servers allow for access from anywhere at any time – and by as many people necessary, without compromising the accuracy or reliability of the data.
Historically, web-based lease management software has been difficult to implement and an expensive investment – particularly for smaller or mid-sized businesses. However, lease management software is now available as a stand-alone solution that does not require the implementation of an entire ERP system.
This significantly changes the cost of investment in lease management software, and offers the benefits of automated data management for what can actually be less than the total cost of your current system.
Cost savings are made from a range of different factors, including:
- Decreased workload and required manpower for accounting teams
- Minimised computer infrastructure
- Guaranteed correct payments
- No missed options
- Full compliance
- Removal of human error
Achieve immediate savings with LeaseEagle
Operating with a number of innovative retail businesses globally, 90% of LeaseEagle clients made back the money they invested in lease management software within the first four months.
Now more than ever, real estate data needs to be complete, well organised and easily accessed, in order to efficiently and accurately complete essential finance functions including invoice processing, business analysis and lease accounting…
To the point, if you are still not operating with the right systems and tools to correctly document and accurately manage real estate assets, then now could be the right time to consider specialised lease management software.
If you would like to learn more about LeaseEagle lease management software, or have any feedback in regards to the article, reach out to LeaseEagle today.