Real estate leases are complex agreements that involve multiple parties and require careful tracking of various details. Traditionally, this tracking has been done using spreadsheets, which can be a convenient and inexpensive solution for small businesses. However, relying solely on spreadsheets to manage real estate leases can pose significant risks. In this article, we will explore these risks and why it is important to consider alternative solutions.
Here are some of the risks associated with tracking real estate leases in a spreadsheet:
- Human Error: One of the biggest risks of tracking real estate leases in a spreadsheet is the potential for human error. With manual data entry, it’s all too easy to make mistakes when inputting data, which can lead to incorrect information being stored and propagated throughout the spreadsheet. This can cause serious problems, such as missed rent payments or incorrect lease renewal dates, which could have significant financial and legal consequences.
- Limited Functionality: While spreadsheets can be a powerful tool for managing data, they do have limitations. For example, spreadsheets are not designed to handle complex calculations or large amounts of data, which could make it difficult to manage a large number of leases. Additionally, spreadsheets can’t easily handle more sophisticated analysis or reporting that may be required by stakeholders or regulatory bodies.
- Lack of Security: Spreadsheets are notoriously insecure, especially when stored on local machines or shared through email. Without proper access controls, anyone with access to the spreadsheet could potentially edit or delete data, or even share it with unauthorized parties. This can be a serious concern for sensitive real estate data, such as lease terms, rental rates, and occupancy levels.
- Difficulty in Collaboration: When multiple people need to access and update the same spreadsheet, it can become difficult to keep track of changes and avoid conflicts. This can lead to duplicate entries, incorrect data, and other issues that can be difficult to resolve. Additionally, spreadsheets don’t always provide an audit trail, making it difficult to track who made changes and when.
- Limited Reporting: While spreadsheets can store a lot of data, they are not designed to generate reports. This can make it difficult to analyze lease data and generate the reports needed for decision-making.
- Inadequate Backup: Spreadsheets are often saved on local computers or servers, which can be lost or damaged in a natural disaster or cyber attack. This can result in the loss of critical lease information.
- Inability to Scale: As a business grows and leases become more numerous and complex, spreadsheets can become unwieldy and difficult to manage. This can lead to missed deadlines, payments, and other critical lease events.
To mitigate these risks, businesses should consider using dedicated lease administration software and a lease administration service provider.
Lease Administration Software
Lease administration software is designed specifically to help manage leases by centralizing lease information, automating workflows, and providing advanced reporting capabilities. With lease administration software, you can easily track lease terms, rental payments, and other important data, all in one secure location.
Lease administration software is also critical for scalability. As your real estate portfolio grows, the software can easily accommodate the additional lease data, without the risk of errors that comes with using a spreadsheet.
Lease Administration Provider
While lease administration software is an essential tool for managing real estate leases, it is still just a tool that needs expertise to get the most out of. Managing lease administration in-house can be time-consuming and resource-intensive, taking away valuable time and resources from other business priorities. Lease administration providers can help companies save time by taking care of lease administration tasks such as lease abstracting, lease review, and lease accounting. This allows companies to focus on core business activities, rather than administrative tasks.
A lease administration provider can provide expertise and experience that goes beyond what software can offer. They specialize in managing leases and have an in-depth understanding of the legal and financial implications of leases. This expertise allows them to offer tailored solutions that are specific to your needs.
In addition, a lease administration provider can help ensure compliance with regulatory requirements and manage risks associated with your leases. By doing so, they can help you reduce costs and improve your bottom line.
While lease administration software can be a useful tool, it’s not a replacement for the knowledge and support provided by a lease administration provider. If you’re looking to manage your leases more effectively, a lease administration provider is an important investment to consider.
Click here for a detailed article on the advantage of a lease administration service provider
National Lease Advisors is a leader in the lease administration sector of the commercial real estate industry. The firm focuses on clients with multiple locations both regionally and globally and helps them manage their lease contracts, and provides lease accounting, transaction management, and audit services.