Industry: Construction/Industrial
Lease Count: 300
Portfolio Locations: Nationwide
Background
A nationwide industrial user with over 300 locations across the United States faced significant challenges in managing its lease portfolio. The company, with a large real estate footprint, managed lease dates and key information using a basic spreadsheet. This system was not only inefficient but also presented a high risk of missed critical dates and milestones. The disconnect between their real estate and accounting teams further complicated matters, leading to inaccuracies and delays in compliance reporting under ASC 842.
Challenges:
Inefficient Lease Management:
Tracking lease information in a spreadsheet was cumbersome, prone to errors, and lacked the comprehensive functionality needed for managing a portfolio of this scale. The absence of a centralized system increased the risk of missing critical lease dates, which could result in costly penalties or missed opportunities for renegotiation.
Communication between Accounting and Real Estate for ASC 842 Reporting:
The lack of coordination between the real estate and accounting teams led to inaccuracies in lease liability and right-of-use (ROU) asset calculations under the ASC 842 accounting standard. This posed a risk of non-compliance, financial misstatements, and audit challenges.
NLA’s Solution:
National Lease Advisors (NLA) was brought on board to address these challenges and streamline the client’s lease management process. Here’s how NLA delivered an effective solution:
Centralized Lease Data Management:
- NLA implemented a robust lease administration platform, consolidating all lease information into a single, centralized database. This eliminated the need for error-prone spreadsheets and provided real-time visibility into lease dates, obligations, and key milestones.
- As part of the onboarding process, NLA cleaned up and organized all lease and lease-related documents. This involved verifying lease dates and other critical data points, ensuring all records were accurate and up-to-date.
ASC 842 Compliance Support:
- NLA worked closely with the client’s accounting team to ensure accurate ASC 842 reporting. This involved aligning the lease liability and ROU asset values with existing financial statements.
- By integrating the lease data into NLA’s system, the accounting team could easily access the necessary information for compliance reporting, significantly reducing the risk of errors and delays.
Improved Cross-Departmental Communication:
- NLA developed and implemented new processes to facilitate better communication between the real estate and accounting teams. Regular check-ins, shared dashboards, and coordinated workflows ensured both teams had access to the same information and could collaborate more effectively.
- These improved processes not only enhanced data integrity but also created a culture of collaboration, reducing the risk of misunderstandings and misalignments.
Efficient and Timely Onboarding:
- NLA prioritized staying on the agreed 3-month onboarding schedule. To achieve this, NLA diverted additional internal resources to support the onboarding process, ensuring a smooth and efficient transition without disrupting the client’s ongoing operations.
Results:
- Enhanced Lease Management: The client now benefits from a centralized, organized lease management platform that provides real-time access to critical lease information. This has significantly reduced the risk of missing important dates and improved overall operational efficiency.
- Accurate and Timely ASC 842 Reporting: With accurate lease data readily available, the client’s accounting team can now produce timely and precise ASC 842 reports, reducing compliance risks and enhancing financial transparency.
- Improved Interdepartmental Collaboration: The new processes established by NLA have bridged the communication gap between the real estate and accounting teams, fostering a more collaborative and productive environment.
- On-Time and Smooth Transition: NLA successfully completed the onboarding within the planned 3-month timeframe, demonstrating a commitment to client satisfaction and effective project management.
Conclusion:
By partnering with National Lease Advisors, the client was able to transform its lease management process, improve compliance reporting, and foster better internal collaboration. NLA’s tailored solutions and dedicated support enabled the client to reduce risk, improve efficiency, and achieve greater control over its nationwide lease portfolio.