Gregory GjiniHow to use our template to move from Excel to lease accounting software? This guide gives you an overview of the process of transition, how smooth it can be, and at the potential ifs and buts.
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This is an article where we will explore the practical process of transitioning lease accounting from Excel to House of Control’s specialized lease accounting software. Before we start, we want to take a step back to put ourselves in our customers’ (former) shoes.
The Masters of Excel
Without exceptions, we meet finance professionals who are masters of spreadsheets. Also, they are alert readers of accounting standards. Complying with the latter using the former is a way of life.
In most instances, the first time we meet our customers is when the limitations of Excel meet the real implications of a high number of leases – with all their complexities. However, signing up for lease accounting software is very seldom like buying a cup of coffee.
Why? We readily admit it: Taking IFRS 16 compliance from Excel to lease accounting software is a real job. However, we want to be clear about four things:
- It never was as big a burden as most perceived to move from Excel to lease accounting software.
- An overview of the actual process most often altered perceptions enough to take action – and make a much-needed change.
- We have now lowered the burden – a lot. What could take weeks or months now takes hours or a few days. We promise, and we will tell you how in this article!
- What hasn’t changed: The longer you wait the more you lose from complying with IFRS 16 in a not-so-scalable way.
The smooth move to lease accounting software
Who better to talk this over with than Karl Oscar Rosli? He is House of Control’s product manager and team lead on IFRS 16. Most of our customers have been assisted by Karl Oscar at some point, for instance in the implementation process or when professional advice or technical assistance have been needed.
“Karl Oscar, let’s assume your next clients have 90 leases with varying start and stop dates, as well as terms concerning options and price adjustments. The data for each lease is kept updated in individual spreadsheets. Can you start talking about how you migrate these leases into House of Control’s solution?”
“Sure, and the good news comes right away. That is, we have created a new template for importing data. And guess what, it is made with Excel. The template has columns with headings for each crucial piece of metadata for each lease contract.”
Karl Oscar shows us how metadata for individual lease contracts are entered on separate rows in the Excel template. These are data that can be found in the lease contract document: Start date, end date, rent/payments, price adjustments, and organizational data. Some fields are mandatory, and you can also add your own columns.
“If the Excel sheet is structured well, it is a quick and easy job to move data from current setup to our import template.”
In this article, we describe the process of complying with IFRS 16 using our software
The small ifs and buts
“That doesn’t appear to be too demanding, Karl Oscar. But say a contract has had changes since its commencement date, how is that imported?”
“Well, our customers have two options when switching from Excel. They can start the calculations from the original commencement or implementation date, and manually recreate the historical changes up until the current ending balance for the RoU and Lease liability. This can be a tedious process, and we have therefore developed an alternative to this.”
“Rather than recreating historical values, our customers can select a "switching date" and upload the opening balance for that period. That will require the historical values to be stored separately from the new calculations, but it will mean that one can save substantial time in the implementation, and rather focus on the value generating parts of the business. Essentially, this option means we can have all the relevant data moved from Excel to our solution in a matter of hours, while limiting manual work to an absolute minimum.”
Karl Oscar says that the amount of adjustments typically increase with time. If you know that sooner or later your business needs to switch to specialized lease accounting software, today is a better time than a year from now.