Calculators (Excel spreadsheets) are a common choice for SME’s that seek to simplify accounting and make it cheaper. But as the scale of any organisation grows, and as the number of operations that they do increases, it becomes apparent that every business needs to either invest a lot of money into hiring dedicated accounting staff or look for alternative solutions to simplify accounting. Let’s look at a particular niche – lease accounting. Is a lease calculator enough for your business or should you seek other, more professional solutions?
A lease calculator needs constant updates
Lease calculators or Excel spreadsheets are very templates of formulas that can cover basic accounting calculations. However, overseeing lease payments and handling related, complex financial operations is very challenging. You will have to update your spreadsheet to remain compliant with the most up-to-date regulations and standards.
If only small changes are necessary, it’s not that much trouble, but if you have to transition from one accounting standard to another, or import new data, then a calculator just can’t cut it. You will have to turn to professional software which is updated externally to meet demands of clients.
Calculators are not tailored to calculate lease liability and variables
If we talk about lease liability, for example, it is an important figure to track because new accounting standards like the AASB 16, IFRS 16 and ASC 842 requires lessees to keep track of it. But it’s just one of many different numbers and figures that are significant.
Calculators aren’t developed around the concept of figuring out complex data and generating in-depth reports and charts. However, dedicated software is developed by professional accountants for professional accounting staff that seeks to keep tabs on data like payment liability, commission fees, index, conversion rates and other variable data.
In-depth features are not available
Accounting isn’t an area where you can afford to cut corners. If you do that, the consequences come back to bite you in the long run. Tax Inspectorates and other financial watchdogs can penalise you or enforce restrictions if you don’t meet compliancy requirements. This means that your accounting staff should be very hands-on and have all of the necessary tools available to them.
Just to give you an example, dedicated IFRS 16 software is capable of re-measuring and adjusting asset value to produce G/L postings. There are also specifically designed features to aid in simplifying lease modifications. Reports are generated almost instantaneously.
Cross-platform data management
Regardless of whether you want to update information on lease payments, add new interest rates or just import data from other applications and platforms, calculators just can’t cut it.
Important accounting information isn’t always stored in one place. You might need to add data from MS Excel, Google Spreadsheets or some XML files. Most calculators will need plenty of alterations before the newly added data is fully integrated. On the other hand, choosing high-level software works better because it allows you to integrate data from other sources and third-party solution providers.