Lease accounting has long been a source of confusion and complexity for businesses—particularly those with diverse asset portfolios, multiple locations, or aggressive growth plans. With the introduction of new accounting standards such as IFRS 16 and ASC 842, which require the recognition of most leases on the balance sheet, the pressure to maintain accurate, up-to-date lease records has increased significantly.

Yet many businesses still find lease accounting to be one of the most time-consuming and error-prone areas of financial reporting. As regulatory demands tighten and audit scrutiny increases, more organizations are turning to lease accounting software to regain control, ensure compliance, and simplify their workflows.

The Rising Complexity of Lease Accounting

In the past, operating leases could often be kept off the balance sheet, allowing businesses to record lease expenses as they were incurred without formally recognizing a right-of-use asset or lease liability. The introduction of IFRS 16 and ASC 842 changed that, requiring nearly all leases—with limited exceptions—to be brought onto the balance sheet.

This has led to a dramatic increase in the amount of work required to:

• Identify lease components in contracts

• Calculate present values of lease liabilities

• Track lease modifications and renewals

• Maintain amortization schedules for right-of-use (ROU) assets

• Reconcile differences between book and tax reporting

For companies with dozens—or even hundreds—of leases across real estate, equipment, and vehicles, managing this manually with spreadsheets has become impractical and risky.

Common Challenges Businesses Face

Many organizations, especially those that scaled quickly or have decentralized operations, face several key challenges when it comes to lease accounting:

• Scattered lease data: Lease agreements may be stored across departments, offices, or even filing cabinets, making consolidation a challenge.

• Inconsistent lease terms: Different contract structures, renewal options, and payment schedules can complicate uniform accounting.

• Manual errors: Complex calculations and data entry leave room for inaccuracies that may not be caught until an audit or reporting deadline.

• Lack of visibility: Without centralized tracking, businesses struggle to forecast lease liabilities or understand their lease-related commitments.

• Non-compliance risks: Falling out of alignment with IFRS 16 or ASC 842 can result in regulatory penalties, audit findings, or reduced investor confidence.

These issues often consume finance teams' time and delay the monthly or annual close—putting a strain on both operational efficiency and compliance.

Handling Modifications and Reassessments

Lease modifications—such as changes in lease terms, additional space, or early terminations—can introduce accounting complexity that is difficult to track manually. Under IFRS 16 and ASC 842, these changes often require remeasurement of lease liabilities and Right-of-Use assets, along with updated journal entries. Lease accounting software simplifies these updates by providing automated modification workflows, built-in calculators, and system-generated disclosures that reflect the latest lease terms. This agility not only improves accuracy but ensures businesses stay responsive to contract changes without disrupting reporting timelines.

How Lease Accounting Software Solves These Problems

Enter lease accounting software: purpose-built platforms designed to automate, standardize, and centralize every aspect of lease management and reporting. Software tools like LeaseQuery, Visual Lease, Trullion, and NetLease have quickly gained traction among businesses of all sizes for their ability to simplify the entire lease lifecycle.

These platforms typically offer features such as:

• Centralized lease repositories with role-based access

• Automated lease classification under ASC 842 and IFRS 16

• Accurate ROU asset and lease liability calculations

• Customizable amortization and depreciation schedules

• Audit-ready reporting and disclosure generation

• Real-time alerts for renewals, expirations, and payment changes

For finance teams, this reduces the time spent on manual tracking and improves confidence in reporting accuracy. For executive leadership, it provides clear, accessible insights into lease obligations and financial impact—essential for budgeting, forecasting, and decision-making.

A Tool for Strategic Growth and Risk Management

Beyond compliance, lease accounting software is increasingly being viewed as a strategic asset. It allows businesses to:

• Understand which leases are most cost-effective

• Compare lease vs. buy decisions with better data

• Align lease management with financial planning and analysis (FP&A)

• Avoid late payments, lease breaches, or overlooked escalations

• Simplify audits and stakeholder reporting

For multi-location businesses, such as retail chains or logistics companies, the ability to track lease data across multiple entities in one platform also ensures corporate-wide alignment and transparency.

Preparing for Audits with Greater Confidence

Audits can be one of the most stressful times of the year for finance teams—especially if lease data is disorganized or incomplete. One of the biggest advantages of using lease accounting software is the ability to produce standardized, audit-ready reports on demand. From amortization schedules and lease reconciliations to historical modifications and supporting documents, all necessary data is stored, version-controlled, and easily accessible. This reduces audit preparation time, minimizes back-and-forth with auditors, and demonstrates a strong internal control environment that reflects well on the company.

Regulatory Pressure and the Push Toward Automation

Regulatory agencies and accounting standards bodies have made it clear: lease obligations must be visible and accurately reported. The Financial Accounting Standards Board (FASB), which oversees ASC 842 in the United States, has issued multiple clarifications to guide businesses through the transition and ongoing requirements.

One such update highlights the importance of remeasurement procedures and judgment in assessing lease terms—something that software tools can handle much more consistently than manual methods. For more details on FASB's official lease accounting resources, visit:👉 https://www.fasb.org/lease-accounting

With auditors and regulators demanding more precision, relying on spreadsheets and scattered files puts businesses at unnecessary risk. Lease accounting software provides an audit trail, standardized methodology, and scalability—making it easier to adapt to updates in the standards.

Cross-Departmental Collaboration and Visibility

Lease accounting is not just a function of the finance department. Real estate, procurement, legal, and operations teams are all involved in managing leases throughout their lifecycle. Without a centralized platform, these departments often work in silos, leading to miscommunication, missed deadlines, or inconsistent lease interpretations. Implementing lease accounting software fosters collaboration across departments, allowing stakeholders to access up-to-date lease data, track changes, and make informed decisions in real time. This holistic visibility also reduces reliance on scattered documents or tribal knowledge.

Lease Accounting and Business Valuation

For companies preparing for investment rounds, mergers, or acquisitions, accurate lease accounting plays a direct role in business valuation. Investors and acquirers pay close attention to lease obligations because they impact EBITDA, long-term liabilities, and asset valuation. Inaccurate or incomplete lease data can distort key metrics and raise red flags during due diligence. Lease accounting software provides consistent, auditable records that not only ensure compliance but also enhance transparency—making the company more attractive to stakeholders and improving confidence in its financials.

Selecting the Right Software for Your Business

Not all lease accounting software is created equal. When choosing a platform, businesses should consider:

• Compliance scope: Does it cover both ASC 842 and IFRS 16?

• Integration: Can it sync with your ERP or general ledger system?

• User experience: Is the platform intuitive for finance and operations teams?

• Scalability: Will it support your growth and an expanding lease portfolio?

• Customer support and implementation: Is training and onboarding included?

A successful implementation requires not just great software, but also a clear plan for migrating data, training users, and aligning internal processes with the new platform’s capabilities.

Final Thoughts: A Smart Investment for the Future

Lease accounting is no longer a back-office task reserved for year-end audits. With new standards and investor expectations raising the bar for financial transparency, it’s become a core element of risk management and strategic planning.

For many businesses, lease accounting software represents more than just a compliance solution—it’s an enabler of faster closes, cleaner audits, smarter decisions, and more confident growth. As your lease portfolio expands and your operations become more complex, having the right tools in place from the beginning ensures you won’t fall behind.