Vice President of Product at Visual Lease.
The ongoing impacts of Covid-19 are greatly changing leasing life cycles and accounting workflows. This pressure, coupled with the new lease accounting standards and looming compliance deadlines, is pushing financial leaders across all industries to reevaluate how they’re managing their leases.
One area they’re exploring to help gain better control over their portfolios is the technology that’s in place to proactively monitor and accurately report on their assets. We recently polled senior finance and accounting professionals and more than one-third reported that they don’t have the right people, technology and tools in place to comply with upcoming lease accounting standards like ASC 842. To combat this, most respondents believe increased investment in supportive technologies is key. Similarly, PwC research results show that implementing the new accounting rule is a massive undertaking — with extensive regulatory changes that can impact your data, processes and systems — and time has officially run out for those taking the “I’ll-deal-with-it-tomorrow” approach.
So, what tech trends should companies be aware of in their search for the right solution? Here are the areas that I recommend keeping an eye on.
Artificial Intelligence/Data Analytics
We all experience the power of artificial intelligence (AI) and data on a daily basis. Think about how you interface with Netflix — the more you watch, the smarter it gets at recommending TV shows and movies that align with your interests. Or consider the all-too-perfectly targeted advertisements you see on your social media channels. It’s almost as if companies are monitoring your everyday life and thoughts! In reality, they’re just using AI to aggregate data from many different sources, including the apps on your phone and the loyalty cards you use at stores.
In Mary Meeker’s “Internet Trends Report,” she highlights how “context-rich data can help businesses provide customers with increasingly personalized products and services.” Now, apply that same concept to the world of lease accounting. We’ll start to see solution providers integrate AI into their products to help users make more intelligent decisions based on their lease data and move beyond the mere reporting of data to leveraging this information to derive insights and then make predictions.
Now, it’s important to note that AI technology already exists and has been refined by some of the most disruptive companies in the world. According to insights derived from Deloitte research, the cognitive technology story will only continue to evolve and move beyond traditional applications in the years ahead. So, there’s no need to reinvent the wheel. Rather, finance professionals can utilize established technologies and apply them in new and innovative ways to optimize the lease accounting process. So, you may want to consider solutions that plan to or currently implement AI.
Internet Of Things
AI is only as good as the data that’s being fed into it. In fact, IDC predicts that “by 2023, most C-Suite leaders [will] implement business critical KPIs tied to data availability, recovery and stewardship.”
As such, organizations can benefit from leveraging data from connected devices to understand how leased assets are being used, by whom and when. Then, AI can do its job of harnessing this data to provide recommendations and actionable insights, as mentioned in the previous section. Consider solutions that support a strong lease management process by integrating with your business intelligence tools so that you have better visibility into your lease data and can unlock new insights across different systems and teams.
Gartner analysts predict that globally by 2022, 90% of large organizations will have implemented robotic process automation (RPA) in some capacity. This can enable enterprises to automate repetitive processes, find efficiencies and increase speed.
Chatbots help companies automate steps and repetitive activities by streamlining processes, which can ultimately increase the speed of the operation. By replicating roles, bots can alleviate workers from monotonous activities such as copying and pasting or pulling and reentering data. RPA bots also are able to help lease accounting teams route approvals through the system of choice.
Ensure that whatever software you’re implementing has the ability to simplify mission-critical and manual lease accounting processes. This can result in monetary savings.
You’ll also likely want your new solution to enable custom configurations within the database. Like a recommendation engine, customized dashboards are meant to cater to different needs so that when you log into your system, you’re met with the information you need, when you need it and in the format that works for you. Dashboards are most impactful when tailored to a company’s unique needs. So, you may wish to prioritize lease accounting technology that’s easily customizable.
In 2022 and beyond, we’ll see organizations leverage all four of these tech trends within their lease accounting processes. As a result, they could save time and money, have greater visibility into the performance of their leases and have the information available to make better operational decisions for their future.