With January 2019 around the corner, the topic of FASB and IFRS compliance is getting more attention, especially among financial and property managers. However, many have not yet started implementing the new standards, but are instead still trying to understand how to interpret the new requirements and determine how it will impact their organization. In my last blog I mentioned that the implementation of the new lease accounting standards is much easier when combined with an Integrated Workplace Management System (IWMS). Today, I will talk about the benefits that this combination can bring to property management specifically.
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.
Increased insight and knowledge about the property portfolio
For many, achieving compliancy is the main reason to look for a software solution to meet the new lease accounting standards. However, combining this effort with an IWMS solution can help make it easier for your organization to meet these compliancy requirements, and in addition opens the door for many new opportunities. Property managers should use this time of change as an opportunity to gain more insight and knowledge about the property portfolio to support higher management goals.
While executives at the C-level may 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, impact the company's future financing options. In many cases, organizations may see an increase in debt of more than 25% - a result that will certainly interest the CFO and prompt critical questions about the leases (PwC, 2016: A study on the impact of lease capitalization IFRS 16: The new leases standard).
Manage (new) ways of working
Looking ahead to ways the new standards will impact the organization, property managers can use their new insights and knowledge about their portfolios to work together with Finance to manage new ways of working that require less space and ultimately fewer buildings. With the help of an IWMS, it is possible to pull data to help reveal underutilized space and help answer hard questions, such as should the lease contracts on certain buildings be renewed? Embracing more flexible ways of working becomes easier to justify because the data from an IWMS shows how 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 cost-effective 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 organization. This is valuable information for long-term and strategic portfolio planning and lease evaluation.