Should Lease Accounting Be Performed In Your ERP?

Enterprise Resource Planning (ERP) software is a suite of applications that allow businesses to integrate and manage their key back office business and financial processes. ERP systems run the back office processes of most organizations with more than $50 million in revenue. The main feature of any ERP software system is the ability to offer its customers a greater degree of synchronization to make their businesses run smoother by unifying and protecting information, automating processes, and producing reports leveraging their core functionality.

However, there have always been advantages to moving some functionality outside of the ERP to other specialty applications that deal with specific functions not usually contained in an ERP suite.

As a result of ERP’s adopting modern technology architectures, today even more functionality is being managed in applications outside the ERP in order to streamline process flow, enhance data consolidation and reporting, or manage complex calculations that the ERP was not originally intended to perform.

Lease accounting is not a basic ERP capability. To perform the required calculations involved in lease accounting would require the use of multiple ERP modules, multiple tables, and extensive customization.

Because lease accounting is a specialized financial calculation and not considered a core ERP functionality, it has not garnered continued investment in development and support.  Few ERP consultants have the required experience and understanding of lease accounting standards and configuration requirements.

Lease accounting typically comprises a very small part of an organization’s financial transactions. Depending on the number of leases you have, it can be very complex and add unnecessary time and effort to ensure your calculations and disclosure reports are correct.

The Black Owl lease accounting solution is built from the ground up; the system is designed to streamline the lease accounting processes, ensuring all accounting standards are correctly applied in the calculations and disclosure reports.

In addition to our powerful system, which is designed to work with any ERP like a stand-alone subledger for lease data, our implementation process demands an understanding of the client’s financial accounting processes and reporting requirements, and ensures alignment of these to the functionality of our lease accounting solution.

Greg Kautz
Greg Kautz

Greg Kautz, CPA, CMA

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