How Automating Lease Accounting Saves Time, Money, and ...€¦ · Webinar Logistics • Slides will be available for download on our website: leaseaccelerator.com • This session

Page 1© 2019 LeaseAccelerator Inc.

Automating IFRS 16 Compliance

HOW AUTOMATING LEASE ACCOUNTING SAVES TIME, MONEY, AND EFFORT


Webinar Logistics

• Slides will be available for download on our website: leaseaccelerator.com

• This session will be recorded and circulated shortly thereafter

• Polling Questions – please the use ON24 Console

• Ask Questions in the ON24 Panel (lower right). Any questions we do not have time to get to, will be responded to after the webinar

• Any technical Issues, please use chat and we will endeavor to assist

Joshua May FCCA

Senior Director of Solution Consulting


Today’s Presenters

Joshua May FCCASenior Director of Solution Consulting

Prof. Dr. Andreas KrügerManaging Partner


Agenda1. Considerations for Day 1 and Day 2:

Complexity and Automation

2. Lease Accounting as a Service (LAaaS): Return on Lease Accounting

3. Lease Accounting 2.0 | SaaS solution: Automate policies, judgments, and decisions

4. Leveraging lease accounting SaaS technologies to automate processes

5. Questions & Answers

Automation for IFRS 16 Compliance


CONSIDERATIONS FOR DAY 1 AND DAY 2

COMPLEXITY AND AUTOMATION

AUTOMATION FOR IFRS 16 COMPLIANCE

Enterprise Lease Accounting Software

© 2019 LeaseAccelerator Inc.


The New Standards Add Complexity

• New conceptual frameworks• Intricate transactions

recording• Analytical processes• More interpretive • Review and remeasurement

required• Principles-based approach


The Controller’s ChallengeCapturing decisions and events across the lease lifecycle:

Usage Parameterisation

ReorganisationAllocations


Events throughout the Lease Lifecycle

RENTCHANGES

OTHERCHANGES

END OFTERM

REAL ESTATELEASE

CHANGES

EQUIPMENTLEASE

CHANGES

Change from Variable to Fixed

EarlyTermination

Floor SpaceContraction

New Sub Lease

Floor SpaceExpansion

LeaseholdImprovements

Impairment

Partial Termination(Asset Removed)

Lost or Stolen

Early Buyout

Early FullTermination

Evergreen

PartialRenewal

Buyout

Termination

Renewal

LEASEDASSET

New AssetAdded

Change toResidual Value

Change toBusiness Plans

LocationChange

Cost CentreChange

LEASE

CPI

LIBOR/SOFR

PerformanceBased


The Problem: Lease Accounting Compliance

UnmanagedHighly Decentralised

• Transactions• Stakeholders• Leases• Assets

Massive Spend

Typical Global 2000 Company€100M to €10B Leasing Portfolio

Moving On to the Balance Sheet High Risk of Audit Failure

Processes(SOX)

FinancialStatements

AssetsLiabilities

10-KFootnote

The new accounting standard has changed this, forever

• No Controls• No Systems• No Processes• à Significant

leakage & losses


LEASE ACCOUNTING AS A SERVICE (LAaaS)

RETURN ON LEASE ACCOUNTING


Innovative Lease Accounting Solutions



Qiado Presenter

Background and Expertise

• Located in Bavaria, Germany

• Expert in the optimisation of leasing processes and in their support with SAP and non-SAP solutions

• Solution Architect for IFRS16-solutions and Lease Management processes

• Cloud-based lease accounting and lease management solutions

Prof. Dr. Andreas KrügerManaging Partner

| 2019 Qiado GmbH All Rights Reserved. 12 Qiado.de

How We Measure a Lease Accounting Solution

Business ImpactReturn on Lease

Accounting(RoLA) Total Cost of Ownership

=


After implementation, organisations are often confronted with excessive TCO of the new lease accounting solution:

High effort to collect and enter dataExample: Car fleet leasing

High effort to maintain dataExample: Cost center changes, lease retirements, indexations

High effort to maintain toolsExample: Regular new patches and bug-fixes

High internal coordination effortExample: Notifications about extensions or terminations, invoice reconciliation

Organisations are often Confronted with Excessive Total Cost of Ownership (TCO)


With a Small Lease Portfolio, a High RoLA is Difficult to Achieve

• Implementation Costs: Not directly depending on number of leases – One-time costs per lease are higher with small lease portfolios

• Maintenance Costs: Cannot be lowered below a certain minimum– Recurring costs per lease are higher with small lease portfolios

• Simple Solutions & Spreadsheets: Do not offer the functionality to create the best possible business impact

Business ImpactRoLA

Total Cost of Ownership =


Lease Accounting as a Service - LAaaSpowered by

Outsource your work-intensive and error-prone lease accounting tasks to an expert solution provider

Benefit from a market-leading software product without having to configure or implement it

Receive all journal entries and transparent reports for full compliance at any time

Instead of building up own additional resources, subscribe to a transparent and scalable pricing model

Adjust your costs to the size of your leasing portfolio by having a simple fee per leased asset

Optional lease management services can help you to further improve your Return on Investment


Service Teampowered by

Lease Accounting as a Service (LAaaS)

Client receives all required data on a regular basis:

• Journal entries for all ledgers on a contract-by-contract basis

• P&L and Balance Sheet KPI reports required for disclosures

LAaaS clients upload contract data into a JIRA system. This can be:

• Contract documents (language restrictions apply)

• Condensed contract data

• Raw list data (e.g., from fleet provider)

Client employees

LAaaS



With a Small Lease Portfolio, a High RoLAis Difficult to Achieve

Business ImpactRoLA

Total Cost of Ownership =

Possible

LAaaS Reduces TCO Significantly• Less internal resources• No tool subscriptions, license costs, IT maintenance, etc.• Costs 100% scalable: less leased assets = less costs

LAaaS Offers Full Functionality of Market-Leading Lease Engine• 100% correct calculations• Full transparency over lease portfolio at any time• Notifications in case of deadlines, extensions, etc.


Step 3

Receive all outputs for your test contracts and check if

this process fulfills your requirements.

Sounds Great. How Can I Try It?

Step 2

Provide a small set of anonymised trial

contracts.

Step 1

Get in contact with us:www.qiado.com


LEASE ACCOUNTING 2.0 | SaaS SOLUTION

AUTOMATE POLICIES, JUDGMENTS, AND DECISIONS


Enterprise Lease Accounting Software



The Lease Accounting Journey

• Future State Design• Data Collection & Cleansing• Software Configuration & Testing• Communications & Training

DEADLINE 1/1/2019

FINISH LINE

DAYONE1




FINISH LINE

“NEW” STARTING LINE

DAYONE1

DEADLINE 1/1/2019




• New Leases & End of Term• Modifications & Reassessments• Monthly Close & Quarterly Reports• Substantive & Process Audit Preparation

FINISH LINE


DAYTWO2

DAYONE1

DEADLINE 1/1/2019






FINISH LINE

The greatest risk and cost is here…

DAYONE1

DAYTWO2

DEADLINE 1/1/2019




• Competitive Sourcing of Financing• Lease versus Buy Analysis• End of Term and Evergreen Management• KPIs & Stakeholder Scorecards


FINISH LINE

The greatest risk and cost is here…

DAYTWO2

DAYTHREE3

DEADLINE 1/1/2019


DAYONE1


Straight Through Processing

REAL ESTATEADMINISTRATION

IT ASSETMANAGEMENT

FLEETMANAGEMENT

CONTRACTMANAGEMENT

PROCUREMENT& SOURCING

GENERALLEDGER

ASSET MANAGEMENT

PROCUREMENT

ACCOUNTSPAYABLE

GENERALLEDGER

ACCOUNTSPAYABLE

ERP APPLICATIONS

LEASE ACCOUNTING SUBLEDGER

Reconciliations

Integration and APIs


The Leasing Centre of Excellence

Testing of embedded leases for inclusion. Classification as operating or finance lease.

LEASEDEFINITION

Subledger cutoff. Reconciliation and adjusting entries. General ledger upload.

MONTHLY CLOSE

Rent and contractual changes. Reasonably certain end of lease plans.

MODIFICATIONS & REASESSMENTS

Classify and record initial journal entries after assessing commencement, term, payments, reasonably certain plans, IBR.

INITIAL RECOGNITION & MEASUREMENT

Recording of journal entries to reflect end of lease renewal, termination or buyout.

END OF LEASE RECORDATION


LEVERAGING TECHNOLOGY TO AUTOMATE PROCESSES

RETURN ON LEASE ACCOUNTING


Innovative Lease Accounting Solutions


Automation vs FTEs

LOW FEATURESOFTWARE

FULL FEATURESOFTWARE

Manual Tasks = More People• Timely tracking of new leases,

changes, end of term• Interacting with stakeholders for

updates, approvals, recordation• Reconciliation and tie-ups• Manual allocation to cost centers,

profit centers, project codes, etc.• Upload of journal entries to ERP• Manual controls and supervision

Automated Tasks = More Software• IFRS 16 and ASC 842• Asset-level lease accounting subledger• Automated Lease classification• Lease vs buy analysis• Multiple parallel ledgers and charts of accounts • Flexible GL coding for automated allocation• Bulk data loader• Fast integrations for GL, A/P, upstream systems• Automated notifications and mailback• Workflow and segregation of duties

SoftwareCosts

SoftwareCosts

HeadcountCosts

HeadcountCosts

Lower Cost of OwnershipMore Expensive. Higher Risk.

Less Expensive. Lower Risk.

TransitionOnly

EnterpriseLease Accounting



QUESTIONS & ANSWERS

JOSHUA MAY [email protected]

PROF. DR. ANDREAS KRÜ[email protected]



THANK YOUleaseaccelerator.com

qiado.com

Documents

How Automating Lease Accounting Saves Time, Money, and ...€¦ · Webinar Logistics • Slides will be available for download on our website: leaseaccelerator.com • This session