As Financial Accounting Standards Board (FASB) released new lease standards, you must get a proper lease audit to stay on track. This has complicated the lease abstraction process, which is one of the biggest reasons you need to audit your lease. If you do not have all your data and terms in place, sticking to compliance and regulations can become a problem.  

Your real estate strategy and leadership body need to assess their needs for a lease audit and immediately start. Only then will you understand, analyze and get usable data from your lease abstractions and smoothen your business plans. You need a team of lease audits to correctly take care of this process.  

The process of lease audits might be complicated and seem redundant, but they are not. They can be handy to keep you updated on FASB standards and establish better tenant relations. There are many benefits beyond this that can positively benefit your system.  

FASB constantly keeps updating their standards and guidelines, and you need to get your lease updated accordingly. It is a constant process, and a proper lease audit can help you ensure that all agreements are running smoothly. There are many complex clauses and terms in the agreements that are beyond comprehension for inexperienced. That can be a roadblock if you do not get an expert from the industry who has a working knowledge of comprehending and analyzing leases. A lease audit partner can help mitigate that in time.  

A lease agreement document forms the backbone of any new or old tenant-landlord relationship. If there are any faults, your tenant might mistrust you and permanently hamper the relationship. When non-experienced people interpret leases, they can come to various conclusions and end up in confusion. That is why a lease audit will help draw up concrete conclusions that are comprehensible for all parties involved. All terms of the lease will be simplified for you, and you can quickly resolve your problems with tenants before they curveball into a significant issue.  

In reality, lease agreements are these huge bulky documents filled with errors opening you up for legal battles. These can be human errors, but they can end up losing a lot of money and your reputation. A lease audit can set the record straight before you go down that rabbit hole of harming your business.  

When you have to handle numerous properties and units, pilling up leases can make portfolio management difficult. When property managers have multiple duties coming their way, it becomes hard for them to keep track of legal lease documents. How about letting your property manager manage the properties while a lease auditor who knows these documents inside outdo the work? This will help you manage your portfolio better and even save up time for expansion. 

A lease auditor can help you quickly identify data discrepancies between systems and straighten them out. They will also help you understand if your balances and payments add up and cross-check them with finances and account holdings. It will give you a chance to understand if your lease terms and clauses are profitable and where you have a chance for improvement.  

CAM is a major portion of any lease agreement, and this is where most real estate owners and managers lose money. A lease auditor will look into this part of the agreement to. They will ensure both you and your tenants keep up with your bargain ends to maintain a healthy relationship. 

You can get experienced help in this complicated task without employing them full-time when you outsource your lease audit work. These experts will know precisely where to look within those bulky documents to get the correct data for you. That is why more than 78% of companies worldwide feel good about outsourcing their work to partner firms.  

Your tenants will gain more faith in you when you get a third-party outsourced lease audit partner. A third-party auditor is neutral to landlords and tenants and has no vested interest in benefitting either. This is the best way for you to go to reach a fair settlement.  

Your lease might have you spending more than you need. When a lease auditor takes a look at your business functions, they will help you realise potential areas of growth. Doing the lease audit internally will not let you find these faulty areas.  

Trained professionals who are solely concentrated on your lease abstraction work are sure to have a quicker turnaround than your internal team. An inexperienced internal team will not have the right expertise and bandwidth to meet all deadlines and keep up with compliances at the same time.  

Human data entry errors are as high as 4%. That is a big area you can cover when you outsource your work. A proper lease audit partner will use a proper selection of top-notch technology and software to streamline the work. This will eventually benefit you in getting error-free work without paying to buy the whole software and install it.  

At KriyaGo, we have a team of lease audit experts and the best technology for you to leverage. We analyze and derive valuable data from bulky leases and find you the best industry insights to work with. We have experienced professionals to help you with all lease-related issues, from lease audits to lease abstractions. To find out more about our services, contact the team today. Book a consultation call and talk to us soon!   

At the end of 2021, the Financial Accounting Standard Board (FASB) rolled out new rules for lease accounting. There have been many new additions that any property manager needs to notice. A proper lease accounting process can help your real estate business keep track of financial impacts on the company due to lease works. Since leases are filled with complicated legal matters and are full of cumbersome paperwork, they can become an enormous burden for a business owner. This tedious process ends up with a lot of mistakes that businesses commit that can end up in major problems in the future.  

Read the full blog to know what these mistakes are and how you can avoid them. 

Mistakes in your lease accounting work disrupt your company's cash flow, burden the finance departments and shake up the regular workflow of the business. Most companies and real estate property managers depend on inexperienced in-house reassigned from other departments to somehow get the job done. This can lead to a lot of data inaccuracy, fraud, lack of budgeting and forecasting, and inability to keep up with compliances. You need to work with experts to solve these issues and avoid long-drawn legal battles with the FASB.  

Companies have been battling with lease administration and accounting work for quite some time now. We have handled this work for clients for a while now. Here are a few of the top mistakes and oversights we saw through years of experience. Keep track of these to avoid them and benefit your business.  

If you do not have a proper data collection system in your real estate business, that is a major hindrance. Having gaps in data order and not getting your lease abstraction on time can make you fall short on lease accounting work and affect your finances. You need to start working with a third-party lease abstraction services provider to get through the process on time.  

If you do not follow a company standard guideline for your lease agreements then your lease accounting work will suffer. As a real estate property manager and owner, you can not indulge in drawing up different kinds of lease agreements and rules for similar tenants. Not only does it puts a lot of burden on the financing department to keep track it also creates a bad brand image with the tenants.  

If you do not put down your CAM rules, regulations, and charges in the lease agreement, lease accounting can never be completely worked out. CAM reconciliation is a crucial step of the whole process to close your books on time and tie up all loose ends. You can not take your tenants by surprise by adding up new CAM charges while doing the lease accounting work, you need to put them in place from the beginning of the deal. This will help all stakeholders be on the same page and get work done on time. 

The FASB rules and guidelines are ever-changing. As a property manager, you may not have the expertise to understand the legal jargon inside the fine print of these rules. But these rules need to be complied with during all lease accounting work to avoid any penalties and legal fines. Staying up to date with these and modifying your lease accordingly is crucial for growth and keeping your business functions stable.  

Only an expert in lease accounting is always updated about FASB rule changes, and you need to hire one to make the job seamless. Following a DIY process will open your company might save some money up to a lot of risks, which can end up in a lot more monetary loss. If you do not want to invest in employing the experts full-time, you can always go for outsourced services with third-party providers. You need to audit your lease and check for any faulty areas, and you also need financial service experts to check if all the terms of the lease are benefitting all stakeholders. 

Keeping up with compliances is never a one-time thing. You need to set up a streamlined process to handle the situation. This will help you get proper data insights, stay on top of industry developments and news and avoid all blocks. Lease data management proves to be cost-effective and gives companies a lot of valuable information about their financial conditions and current happenings. It will also help you optimize your lease payments and never be on the wrong side of compliances.  

Before you reach lease accounting, you need to lease extraction work to be done in order to get scalable and comprehensible data to work with. This can be done with the help of the right technology selection in project management. The right software can fasten your workflow by processing all the data in no time and helps in keeping up with all deadlines. Completely depending on manual labor to get the job done can be harmful to your ROI in the long run.