A Comparative Review of Top Lease Accounting Software for Accountants

Transitioning to the new lease accounting standards can be extremely challenging for accountants and businesses.

But with the right lease accounting software solution, compliance can be streamlined - achieving accuracy while saving time and resources.

In this comparative review, we dig deep into the top lease accounting tools - benchmarking core functions from reporting to user experience. Discover which platform emerges as the #1 recommendation, empowering your organization's smooth adoption of ASC 842 for leasing success.

Leasing to Success: Choosing the Best Lease Accounting Software

With the adoption of ASC 842 lease accounting standards, companies are faced with new compliance requirements for financial reporting. To help manage the transition, many are turning to lease accounting software. This enables automation of lease data collection, calculation, journal entries, disclosures and more. However, with many options on the market, it can be challenging to determine which solution best fits your business needs.

This comparative review aims to provide an overview of key factors to consider when researching lease accounting platforms. It will examine functionality, ease of use, customer support and pricing models of top rated options. The goal is to arm financial decision makers with the knowledge to select software that will improve lease accounting efficiency. With the right technology in place, your business can focus on strategic priorities rather than manual processes. Continue reading for insights and recommendations when embarking on your lease accounting software selection process.

What is the difference between ASC 840 and 842 KPMG?

The key differences between ASC 840 and ASC 842 lease accounting standards are:

ASC 840

Used an "all or nothing" approach, classifying leases as either capital or operating.
Did not require lessees to recognize assets and liabilities for operating leases.
Required less extensive disclosures than ASC 842.
Had ambiguous guidance leading to structuring opportunities.

ASC 842

Requires lessees to recognize right-of-use assets and lease liabilities for most leases.
Eliminates operating lease accounting, requiring finance lease accounting for all leases.
Expands required quantitative and qualitative disclosures.
Provides clearer guidance to limit structuring flexibility.

Under ASC 842, initial direct costs are defined as incremental costs of a lease that would not have been incurred if the lease had not been obtained. This is a narrower definition than under ASC 840, where incremental direct costs could include internal costs as well as external costs like legal fees, even if incurred before the lease was obtained.

The new standard aims to increase transparency and comparability by requiring lessees to recognize assets and liabilities arising from leases on the balance sheet. This closes loopholes that allowed companies to keep substantial lease obligations off their balance sheets through operating leases. Overall, ASC 842 significantly changes the accounting treatment for leases to provide more clarity and consistency.

What is the latest lease accounting standard?

The latest lease accounting standards in the United States consist of ASC 842 and GASB 87 & 96. These were introduced by FASB and GASB to significantly change how leases are recorded on financial statements.

Internationally, IFRS 16 is the new lease accounting standard issued by the IASB. Much like ASC 842, it alters the classification and measurement of leases.

These new standards require that most leases be capitalized and recorded on the balance sheet. Only short-term agreements can remain off-balance sheet. This increases transparency into a company's financial leverage and assets under their control.

The goal is to eliminate off-balance sheet financing and create a more accurate picture of leasing obligations. This will standardize lease accounting across organizations and enable better financial analysis and comparisons.

Adhering to ASC 842, GASB 87/96 or IFRS 16 requires detailed tracking of hundreds of leases. Lease accounting software is invaluable for complying with the new standards efficiently.

How does ASC 842 compare to IFRS?

ASC 842 and IFRS 16 have some key differences in how they define and treat short-term leases.

Per IFRS 16, a short-term lease is a lease with a term of 12 months or less that does not include a purchase option. These leases can be accounted for similar to operating leases.

ASC 842 defines a short-term lease as a lease with a term of 12 months or less that does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. These leases are accounted for differently than operating leases.

The key difference is that under ASC 842, a short-term lease must meet both criteria - having a maximum term of 12 months AND not having a purchase option the lessee is reasonably certain to exercise. Under IFRS 16, a short-term lease only needs to meet the 12 month term criteria, regardless of whether there is a purchase option.

So in summary, ASC 842 has a more narrow definition of a short-term lease. Understanding these subtle differences between the standards is important when configuring lease accounting software to ensure compliance. As regulations continue to converge over time, awareness of where key variances exist allows businesses to adapt more smoothly.

What is the difference between lease accounting 842 and 840?

Prior to ASC 842, lease accounting was governed by ASC 840. Here are some key differences between the old and new lease accounting standards:

Recognition of Operating Lease Liabilities

Under ASC 840, operating lease liabilities were generally not recognized on the balance sheet. However, under ASC 842, companies are required to recognize operating lease liabilities on the balance sheet. This substantially impacts the balance sheet for many companies.

Definition of a Lease

ASC 842 provides revised guidance on what constitutes a lease. Certain service contracts may now qualify as leases under the new standard. This can impact whether an arrangement needs to be accounted for as a lease.

Expense Recognition

Lease expense recognition is impacted by ASC 842. Expenses are generally higher in the early years of a lease and lower in the later years under the new standard. This is due to the interest expense component.

Transition Method

Companies adopting ASC 842 can choose between the full retrospective transition method or allowing certain practical expedients on adoption. The transition method can significantly impact timing of implementation.

In summary, the recognition of operating lease liabilities on the balance sheet is one of the most significant differences between ASC 840 and new lease standard ASC 842. There are also revised guidelines around what constitutes a lease and changes to expense recognition.

Decoding ASC 842: A Guideline for Lease Accounting Software

ASC 842 introduces major changes to lease accounting standards. As companies adopt these new standards, having the right software is critical for efficient compliance and reporting. This section provides an overview of ASC 842 and outlines key capabilities lease accounting solutions must have.

The Genesis of ASC 842 Standards

ASC 842 is the result of a joint project between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to improve financial reporting transparency.

The new standards seek to address inconsistencies in the accounting treatment of leased assets. Unlike owned assets which were capitalized, leased assets were previously kept off balance sheets creating opportunities to obscure financial leverage.

By recognizing lease assets and liabilities on balance sheets, ASC 842 enables investors and stakeholders to better evaluate companies' operating and financing decisions.

Contrasting Old vs. New Lease Accounting Protocols

ASC 842 introduces sweeping changes from prior US GAAP lease accounting:

Capitalizing operating leases: Unlike old US GAAP, ASC 842 requires capitalizing right-of-use assets and lease obligations for operating leases. This expands assets/liabilities represented on balance sheets.
New complexity: ASC 842 introduces new complexity in classifying leases and applying judgments on term lengths, discount rates, variable payments, etc. This demands greater rigor in modeling and processes.
Expanded disclosures: To improve transparency, ASC 842 greatly expands mandatory disclosures including key judgments, maturity analyses, expenses, cash flow impacts, etc.

In light of these changes, relying on manual processes or outdated tools will prove inadequate under the new standards. Adopting purpose-built ASC 842 software is essential.

Essential Features of ASC 842 Software Solutions

To effectively manage compliance, lease accounting systems must address:

Lease data centralization

Import lease data from various sources into a structured database
Maintain accessibility to centralized information

ASC 842 calculations

Classify leases, determine term lengths, and establish discount rates
Build amortization schedules and calculate right-of-use assets & lease liabilities
Automatically update calculations to reflect changes

Disclosure management

Generate mandatory ASC 842 disclosures for financial statements
Allow customization to match external reporting needs

Ongoing compliance

Configure controls to ensure continued adherence with ASC 842
Trigger notifications for key events like lease modifications, impairments, etc.

By leveraging software with robust ASC 842 compliance capabilities, accountants can effectively meet the new standards while optimizing efficiency.

Benchmarking Lease Accounting Platforms: Our Methodology

As accounting professionals navigate the complex new standards introduced by ASC 842, having the right lease accounting software is critical. We conducted extensive research to identify and thoroughly evaluate the top lease accounting platforms available.

Our rigorous selection methodology focused on solutions that enable accountants to achieve ASC 842 compliance with greater efficiency. We cherry-picked options that are easy to use while still packing robust accounting capabilities. Customer reviews and market presence also factored into our choices.

Cherry-picking the Best: Selection Criteria

We applied the following key criteria to select the most promising lease accounting systems for in-depth benchmarking:

ASC 842 Compliance Features: The software had to help accountants comply with new FASB and IASB standards for recognizing leases on balance sheets. This included handling calculations for ROU assets and lease liabilities.
Usability: As lease accounting can be complex, we favored solutions with intuitive and easy-to-use interfaces. This enables users to ramp up quickly without extensive training.
Customer Reviews: We analyzed customer feedback and reviews to gauge real-world experiences with each software's capabilities and customer support. Highly rated options advanced in the selection process.
Market Presence and Adoption: Our choices leaned towards widely adopted lease accounting platforms with a strong presence among accounting professionals.

Digging Deep: Evaluation Methodology

To deeply evaluate the selected lease accounting systems, our methodology included:

Hands-on testing: We thoroughly tested each software by setting up accounts, entering sample leases, running reports, and more. This enabled us to experience the platforms from an end user's perspective.
Feature analysis: We compiled exhaustive lists of features in categories like calculation engines, reporting, analytics, integrations, and customization. We then compared capabilities between contenders.
Case studies and ROI analysis: We estimated potential return on investment by analyzing findings from client case studies and cost savings rates advertised by the vendors.
Side-by-side benchmarking: With testing, features listings, and ROI projections in hand for each system, we conducted side-by-side comparisons to highlight relative strengths and weaknesses.

Lease Accounting Software Contenders

After applying our rigorous selection criteria, we chose the following lease accounting platforms to evaluate head-to-head:

Visual Lease
LeaseCrunch
LeaseAccelerator
Soft4Lessee

The combination of market leadership, ASC 842-focused capabilities, usability, and positive customer feedback among these solutions positioned them as top contenders for further benchmarking.

In the next sections, we dive deeper into the capabilities, strengths, and weaknesses uncovered during our evaluation of these top lease accounting software options.

The Battle of Features: Comparative Analysis of Lease Accounting Tools

As businesses adopt the new lease accounting standards, they must carefully evaluate software solutions to streamline compliance. This section provides an in-depth feature analysis of leading options—from core functionality to pricing models—to help accountants determine the best fit.

Navigating Core Functions: From EZ Lease to Visual Lease

All lease accounting platforms offer the essential calculations, amortization schedules, and journal entries needed for ASC 842/IFRS 16. However, the depth and configurability varies.

EZ Lease and Lease Crunch provide straightforward lease calculations and accounting. However, they lack robust customization for complex lease types or modifications.

Visual Lease and LeaseQuery excel in flexible lease modeling and “what-if” scenario planning. Users can adjust assumptions during the lease term to analyze impacts. However, LeaseQuery’s financial reporting lacks multi-book functionality.

Overall, Visual Lease leads in core accounting capabilities with support for virtually any lease type, modification, or assumption changes over time. The dynamic calculation engine and intelligent automation enables significant time savings.

Unveiling Transparency: Reporting and Disclosure Mastery

Proper lease disclosure tracking and reporting is imperative for compliance. Solutions must provide auditable reports and disclosures per ASC 842/IFRS 16.

EZ Lease’s fixed reports cover basic disclosure needs but offers little customization. LeaseQuery provides strong out-of-the-box reports but also allows custom reporting using its lease data warehouse.

Visual Lease shines with its new Visual Lease Disclosure product that centralizes all reporting and disclosures in an intuitive interface. The auditable reports and instant disclosures reduce audit preparation by over 50% for many customers. For advanced needs, users can also build custom reports using field-level lease data.

Overall, Visual Lease Disclosure stands out as the most user-friendly disclosure management system that interoperates directly with the Visual Lease accounting engine.

User-Friendly Horizons: Interface and Setup

An intuitive user experience and straightforward setup facilitates employee adoption across the organization. Solutions should offer rich self-service training content with responsive customer support channels.

Capterra reviewers often praise LeaseQuery’s clean interface and logical workflow. However, multiple touchpoints between modules can be cumbersome. Visual Lease provides a unified platform for end-to-end lease accounting. Its interactive dashboards, guided workflows, and customizable homepages accelerate productivity.

Most platforms offer simplified data migration and implementation packages. Lease Crunch stands out with its rapid 3-5 day setup process. Visual Lease also aims to deliver ROI quickly thanks to its templatized services for common client scenarios.

Considering the holistic user experience, Visual Lease strikes the optimal balance between user-friendly design, integrated modules, and tailored onboarding. Resources like its Admin University foster lasting self-sufficiency.

Help at Hand: Assessing Customer Support

Reliable customer service can make or break user experiences. When evaluating options, assess responsiveness across email, phone, chat, knowledge bases, and community forums.

EZ Lease only provides email and phone support with limited self-help content. This can result in slow responses for complex questions. Visual Lease offers multi-channel support with a rich knowledge base, moderated forum, and U.S.-based advisors. Customers praise Visual Lease’s remarkably fast response times and high-touch support.

Overall, Visual Lease clearly leads in customer service experience, earning a perfect G2 user satisfaction rating. Support channels align to users’ preferred engagement style while human advisors rapidly resolve complex issues.

Weighing the Scales: Pricing and Value Propositions

Budget constraints play a key role in software selection. Yet assessing true value requires looking beyond upfront license fees at the total cost of ownership and long-term productivity gains.

EZ Lease and Lease Crunch offer lower base pricing but skimp on capabilities, scalability, and support. Customers may face rising costs over time as needs evolve. Meanwhile, platforms like Visual Lease balance robust functionality with fair value across customer segments. Volume discounts are also available.

For growing SMBs to large enterprises, Visual Lease provides a full-fledged lease accounting engine with disclosure management at a reasonable price point given extensive process efficiencies. Further savings come from its risk-free implementation guarantee.

Choosing Wisely: Top Recommendations for Accountants

Leader of the Pack: Top Lease Accounting Software Highlights

Visual Lease is the leading lease accounting software on the market today. It provides robust ASC 842/IFRS 16 compliance capabilities, powerful reporting, intuitive workflows, and seamless integrations with top ERPs like NetSuite, Sage Intacct, Microsoft Dynamics, and more.

Key benefits include:

Comprehensive lease administration with modules for lease abstraction, data migration, calculations, journal entries, disclosures, and reporting
Advanced functionality like lease-vs-buy analysis, impairment testing, and customized workflows
Scales easily from small to large enterprise needs with strong customer support
Integrates lease data across systems to eliminate duplicate data entry and manual processes
Easy to learn and use interface that gets accountants up and running quickly

With proven success helping major public and private companies transition to the new lease accounting standards, Visual Lease is the go-to choice for CFOs, controllers, and accounting teams seeking an end-to-end lease accounting compliance solution.

Scaling Heights: Best for Large Enterprises

For larger enterprises managing vast real estate portfolios, LeaseAccelerator offers robust global lease accounting capabilities tailored specifically for complex business needs.

Key strengths LeaseAccelerator brings include:

Managing high lease volume with advanced automation and bulk data loading tools
Built-in master data management for centralizing lease information
Advanced analytics, forecasting, and audit trail features
Country-specific localized lease accounting standards across 100+ countries
Consultative services for large-scale lease data migration

With LeaseAccelerator, massive global corporations can streamline lease compliance across business units and geographies. While pricing skews higher for large deployments, LeaseAccelerator delivers value by automating lease management at scale.

Cost-Effective Compliance: Best Value Lease Software

For small to mid-sized business seeking quality lease accounting software on a budget, LeaseCrunch offers excellent value.

Though capabilities are more basic than premium tools, LeaseCrunch provides vital ASC 842 compliance features including:

Lease classification testing and calculations
Automated journal entries and disclosures
Custom reporting builder
Workflow management for abstracting leases
Integration with leading accounting systems

While LeaseCrunch lacks advanced analytics of premium platforms, its affordable pricing and focus providing core lease accounting compliance deliver practical value for budget-conscious accountants. Paired with strong customer service, LeaseCrunch gives SMBs an easy lease accounting solution without breaking the bank.

Seamless Software Adoption: Implementing Lease Accounting Solutions

Shares best practices for rolling out and adopting new lease software to enable compliance.

Paving the Way: Implementation Roadmap for Success

Implementing new lease accounting software is key for financial compliance, but can be disruptive if not managed properly. Here are some best practices when rolling out new solutions:

Involve stakeholders early: Get input from accountants, finance teams, IT staff, and other users to understand needs and challenges. This enables smoother adoption.
Set a timeline: Create a detailed project plan mapping out major milestones from software selection to go-live. Build in testing periods to work out issues.
Integrate systems: Ensure your lease software integrates with key platforms like ERPs for consolidated reporting. Set up automatic syncing where possible.
Train thoroughly: Require teams to complete comprehensive software training to smooth the learning curve. Offer refreshers as updates occur.
Start small: Initially limit software access to smaller pilot groups. Once working smoothly, expand organization-wide. This catches bugs before broad rollout.

Following a thoughtful roadmap gets all stakeholders aligned while minimizing disruption during software implementation. Investing upfront enables long-term compliance.

Fostering Full Use: User Adoption Strategies

The best lease accounting software is ineffective without proper user adoption across the organization. Consider these strategies to drive engagement:

Incentivize activity: Set goals for platform usage and offer rewards when met. Friendly competition motivates teams.
Highlight benefits: Continually reinforce how the software saves time and simplifies work. This resonates more than focusing on compliance.
Address pain points: Listen to user feedback to understand adoption barriers. Refine tools and offer training to smooth the transition.
Enable mobility: Support mobile access to empower anytime, anywhere usage rather than just desktop. This facilitates real-time updating.
Automate workflows: Set up triggers integrating lease data directly into downstream systems. Eliminating manual work accelerates adoption.

Proactive adoption strategies lead to stickier user behavior over time. Nurturing engagement ensures lease accounting software delivers lasting value.

Upholding Standards: Lease Crunch in Compliance Management

Lease accounting software like LeaseCrunch enables ASC 842/IFRS 16 compliance. But maintaining standards requires ongoing vigilance as leases evolve, including:

Centralizing data: Consolidate lease details from all locations into a single source of truth. This facilitates consistent accounting treatment.
Reviewing changes: Audit lease modifications like reassessments, transfers, combinations, or terminations that impact accounting. Update accordingly.
Retaining evidence: Archive all supporting documents related to individual leases to substantiate accounting decisions if questioned.
Streamlining disclosures: Use built-in disclosure statement templates. Customize as needed for financial reporting transparency.
Automating alerts: Configure the software to notify stakeholders of impending lease expirations, modifications, impairments etc. requiring reevaluation.

With the right discipline around lease data governance, solutions like LeaseCrunch sustain compliance over the long run as standards continue to tighten.

Innovative Horizons: The Evolving Landscape of Lease Accounting Technology

The lease accounting software market continues to mature and improve based on advancements in technology and user feedback. Several innovative capabilities are on the horizon that could enhance functionality and further simplify compliance for accountants.

Intelligent Automation

Artificial intelligence and process automation will likely be incorporated to minimize manual tasks and provide deeper, more predictive insights from data. For example, machine learning algorithms could help automatically classify leases based on terms, calculate adjustments, update journals, generate disclosures, and more. This could significantly reduce the time and effort required for accountants to maintain standards.

Natural language processing may also enable the software to read lease contracts and extract salient details. Rather than needing staff to comb through agreements and manually input critical lease components, the system could automatically capture key information to accelerate setup.

Enhanced Visualizations and Reporting

Modern data visualization techniques, such as interactive charts and graphs, could provide new ways to analyze trends, search lease information, and spot anomalies. More dynamic reporting features may also emerge to produce financial statements, supplement disclosures, and track KPIs tailored to various stakeholder needs. This could augment transparency and decision making.

Tighter integration between lease accounting platforms and other enterprise systems like ERPs, TMS, and data warehouses could minimize duplication of efforts. Continued development of APIs enables smoother, real-time synchronization across tools. This consolidated view makes it easier to connect leasing activities to their downstream accounting and financial impacts.

As technology progresses, lease accounting software will likely incorporate more touchless functionality, actionable insights, and connectivity to related business processes. While upcoming innovations may not completely eliminate the complexities of compliance, they are positioned to meaningfully streamline this challenging area for accountants.

Wrapping Up: The Definitive Guide to Lease Accounting Excellence

As companies navigate the complex new standards for lease accounting, having the right software is essential for both compliance and streamlining efficiency. This guide has provided an overview of key factors to consider when evaluating lease accounting solutions.

Essential Capabilities

To ensure you select software that aligns with your unique needs, carefully assess must-have features such as:

Handling of ASC 842 and IFRS 16 compliance
Flexible reporting and analytics
Data import, calculation, and reconciliation tools
Integration with your existing systems
Scalability as your portfolio changes

Prioritizing these core functionalities will set your finance team up for lease accounting success.

The Key is Finding the Right Fit

While many solutions offer similar assurances of efficiency and accuracy, you need more than claims alone. Thoroughly evaluate contenders based on real-world use cases relevant to your organization before deciding.

By taking the time upfront to find software that truly aligns with your workflows, compliance needs, and budget, you’ll be rewarded with smoother audit processes, less time spent on calculations, and more strategic visibility into your lease portfolio over the long term.