IFRS 16 is now high on the agenda of many financial and property managers. Many have not yet started implementing the new standard, but are still trying to understand how to interpret the new requirements and what the impact will be on the organisation. In my last blog I mentioned that the implementation of IFRS 16 is much easier when combined with an Integrated Workplace Management System (IWMS). The important benefits of this for the organisation in general can be read in my previous blog. Today I talk about the benefits specifically for property management.
White Paper – Timely implementation of IFRS 16 with an IWMS
This white paper, based on discussions with global corporations, reveals the importance of combining IFRS 16 compliancy with an IWMS from within one solution.
More insight and knowledge about the property portfolio
Meeting the new lease accounting standard is the main reason to look for a software solution that supports compliance. However, combining this with an IWMS solution will not only make it easier to meet the requirements of IFRS 16, it also offers many new opportunities in property management.
The new standards for lease accounting are the ideal opportunity for property managers to gain more insight and knowledge about the property portfolio to support higher management goals.
While executives at C-level might have previously shown little interest in lease contracts for property and equipment, this will radically change now that leases are included as debt on the balance sheet and therefore have an impact on the company's future financing options. In many cases, this involves an increase in debt of more than 25%, as a result of which the Chief Finance Officer will now certainly be interested and ask critical questions about the leases (PwC, 2016: A study on the impact of lease capitalisation IFRS 16: The new leases standard).
Manage (new) ways of working
For example, property managers can, together with colleagues from Finance, manage new ways of working that require fewer square metres and ultimately less buildings. It is also possible that the data reveals certain buildings are underutilised and then the lease contract does not need to be renewed. Embracing more flexible ways of working is now easier to justify because the data from an IWMS shows it reduces both costs and the impact on the balance sheet.
Impact on the property management strategy
With accurate and complete data, property managers have much more control and can benchmark their portfolio, evaluate alternatives, and make better decisions. It can now be clearly seen what impact the property management strategy has on the satisfaction and productivity of employees, sustainability performance and on the profit and loss account of the organisation. This is valuable information for long-term and strategic portfolio planning and lease evaluation.