Property Lease Management Systems are sophisticated and powerful tools which assist lessees across the country (and around the world) in organising and managing their obligations of their leases. However, a recent influx of software solutions of all shapes and sizes for commercial businesses begs the question, “How do I tell which one is the best lease management software for my company?”.
Welcome to LeaseInfo’s weekly blog. This week we will be diving into the world of Retail Lease Management Software in an attempt to create a comprehensive guide for what to look for when choosing a Lease Management System.
What are Property Lease Management Systems?
Property Lease management software stores important data about leased property and/or equipment and often the associated financial and legal information. Saving time by retrieving lease dates, clauses or other information quickly as well as providing an overview of the companies lease portfolio and creating key date reminders. A Lease Management System is different to say a Property Management/ Facilities Management System which manages issues such as trust accounting, facilities contract management, although some lease management system incorporate some of those features.
What to look for in a Property Lease Management Software
With the multitude of systems that companies can now choose from to help manage their commercial leases, it is imperative that business owners understand what to look for when it comes to choosing a system that is right for their company. The following are some of the key lease management software features LeaseInfo Group believes that you should look for before making a decision about which system to sum up too:
Database Management and Data Investigation
- What database is used to manage the system and how powerful it is?
- How is the data going to be uploaded into the system? This is a fundamental task in their system that abstracts the leases or documents the user needs to upload from excel.
Accounting Standard Compliance
There are a multitude of accounting standards that tenants must comply with or face serious civil and criminal penalties. Moreover, the newest of these standards; IFRS-16/ AASB-16 are not only difficult to manage but require a high degree of computing power to do the calculation. Make sure that the Lease Management Software you choose is compliant the all the relevant accounting standards and check whether IFRS-16 / AASB-16 impacts your business.
Forecasting and Budgeting
In addition to complying with accounting standards your system should be able to forecast and export key financial data from relevant leases and portfolios such as rents outgoings, promotion levies and other charges. Your Lease Management System should be the central place for forecasting including “what if” scenario analysis around market rent and CPI’s.
Without a centralised system and correspondence trackers, lines of communication can easily break down and assigning responsibility for tasks can become increasingly difficult. When looking at a system communication capacity should be evaluated as to whether it is able to:
- Manage correspondence with each store / franchise
- Manage correspondence with key stakeholders
- Record and track all communications between various relevant parties
Reminders and Alerts
When managing a portfolio of lease, it is imperative that certain key date(s) are not missed. If a market rent review or lease option date is overlooked (not to mention dozens of other highly important dates) then it can have serious financial consequences for your lease and the company as a whole. A Lease Management System must be able to automatically create and track key dates as well as set custom reminders at various points throughout the year. This feature is particularly important when dealing with a large lease portfolio.
At a bare minimum, your system should be able to create reminders for:
- Lease Expirations
- Option Exercise Windows
- Rent Escalations
- Market Rent Review
- Insurance Policy Expirations
- Customisable dates, the better systems will have an interface to products such as Outlook.
Data protection and security need to be a top priority when looking into a Lease Management System. The software applications should be secured with strong SSL encryption to keep your firm’s information safe. SSL encryption scrambles data to prevent unauthorized parties from accessing it. Apart from SSL, the software should regularly back up your leasing data for safety.
Most companies are developing property lease management software and deploying them on the cloud. These programs use secure data centres that have robust IT infrastructure and redundant fail-safe measures.
An added bonus of cloud storage is that data can be accessed anywhere with an internet connection. These are some of the issues to consider when choosing your Lease Management System. However it is important to understand where the data is being stored. Many companies require their data to be stored locally.
A key decision in choosing a lease management system in what type of support is available as part of the subscription fee and what level expenditure is available to support the product.
For example, does the software company have their own “in-house” product experts or do they outsource this. Another key consideration is whether their software development is done in-house or is it sub-contracted through third parties. These are the some of the issues to consider when choosing your lease management system.
This post was authored by Simon Fonteyn. Simon is one of Australia’s leading experts in retail, childcare and medical leasing and rental valuations. He holds a Degree in Accounting & Finance, a Diploma of Valuation, a Masters of Management and is an Associate of the Australian Property Institute. With over 25 years experience in the commercial property industry, Simon founded LeaseInfo® as a way to provide more transparency to the industry.