The Secret to Effective Lease Management

Let’s set something straight before we dive into the ins and outs of effective lease management: Lease management is synonymous with lease administration. They are different terms for the overall process of performing daily tasks and upkeep related to a company’s lease portfolio.

However, since every lease contract is different, each lease management position has different requirements, which can make lease accounting difficult. But never fear! We are enclosing the secret to effective lease management in this blog, so keep reading to ease the burden of lease management on your company.

What Are The Types of Leases?

First, let’s talk about the different types of leases that exist:

Net Lease

Net leases are common types of leases for owners of smaller scale real estate properties. With this type of lease, it is common to have the lessor pay for everything, including property taxes, insurance, maintenance, repairs, and utilities.

Triple Net Lease

This is the most common type of real estate lease, and the base rent, property taxes, insurance premiums, etc. are all paid by the lessee. However, the lessor still does a lot of work to figure out the charges. 

What Is Lease Management/Lease Administration?

Lease management, or lease administration, is the practice of keeping all of a company’s leases organized once they have been negotiated and signed. After a lease is signed by all the necessary parties, it is either stored as a hard copy, on a server, or with software

Following the signing and storing of a lease is the “lease abstraction,” where the most important details of a lease are placed in an easy-to-browse document called an abstract. Additionally, the lease information should be inventoried to allow for easy reporting later on.

Finally, the onboarding process begins, during which leased assets that are the subject of a lease are acquired by the lessee and activated for use. As the term of this lease continues, lease administration tasks are omnipresent and always important. If any aspect of a lease changes, it must be updated and abstracted.

Audits and reporting also fall under the umbrella of lease administration responsibilities.

What Does A Lease Administrator Do?

Lease administrators perform lease administration/lease management tasks and manage ongoing lease maintenance, including tracking key dates in the lease, enlisting a broker to renegotiate payments, and understanding and reconciling CAM charges from the lessor.

Why Is Lease Administration Important?

For any business, real estate costs end up being one of the most financially significant expenses with which they have to deal. Therefore, making sure the management and reporting of the financials around your lease portfolio is of the utmost importance.

What Does A Lease Administration Analyst Do?

A lease administration analyst’s job differs slightly from a lease administrator’s; the former reviews leasing contracts to ensure that they meet the terms of both the company providing the lease and the lessee.

What Is Lease Management Accounting?

Lease management accounting is different still; it is the process of a company recording the financial impact of its leasing activities, including AP, AR, and CAM reconciliation and monthly entries. The process of lease management accounting requires documents like balance sheets, cash flow statements, and income statements to be updated and reconciled regularly.

The Secret To Effective Lease Management: Lease Management Software

The secret to effective and efficient lease management is implementing software into your processes! 

With something as influential and crucial as lease management, you don’t want to take chances with incorrect calculations and data errors. Lease management software can minimize those errors and incorrect calculations.

What Is Lease Management Software?

Lease management software automates many aspects of lease accounting and lease management processes. LeaseCrunch’s software in particular helps to ease the pain of lease management/lease administration in that you can:

  • Add as many leases as you like and manage them all in one dashboard
  • Add leases in just a few minutes
  • Rest assured your lease management and accounting is compliant with the latest GASB statements
  • Collaborate with clients to ensure lease information is correct

Contact LeaseCrunch today to get a free demo, or to get answers to any questions about how LeaseCrunch can make lease management easier for your firm.

comments
0