IFRS 16 is about achieving greater financial transparency. The only way an organisation can truly accomplish this is by safeguarding the integrity of its lease information. It’s simply not enough to be in a satisfactory position by ‘deadline day’, rather businesses need to be ensuring they are fully compliant at any given time, throughout time. But how is this done exactly? What are the steps that need to be taken? And what are the risks to data integrity within each of these? This blog series aims to answer these questions by breaking the compliance journey down into four identifiable stages.

In this blog, we’re looking at steps required to ensure compliance at the data abstraction stage.   

Data Abstraction

If we are to imagine an organisation’s journey towards full compliance in four key stages, then it is stage two where the task begins to become more complex. This is because stage two is where lease information is ‘lifted’ or ‘abstracted’ from its original form and readied for calculation. The intense and repetitive nature of this task – and the complexity involved in calculation – means that the risks to data integrity are far higher than they are in the previous stage. It’s crucial that companies get this process in check because any error from this point onwards will inevitably produce skewed figures in final reports that mislead both CFOs and shareholders.

A large multinational will find this process to be particularly labour intensive, especially if they delegate data abstraction to employees across different sites. The ‘human’ route will naturally present greater risks to data integrity, as each IFRS project team will have its own method for completing the task and storing the data. If this procedure is not strictly controlled and coordinated under one ‘roof’, the likelihood of errors, duplication, miscalculation, and general oversights is magnified. With less than a year to go until the new standard goes live, it’s arguable that the ‘manual’ option is simply untenable for organisations with a complex portfolio of leases. One because it will simply take too long, and two because any extensive time spent correcting errors will inevitably put an embarrassed CFO in front of auditors, or worse still, picking up the bill for penalties incurred.

This predicament might instil trepidation in some finance departments, especially as there will be so many new faces joining the compliance process for the first time. Clearly, there’s a pressing need for a platform that automates the abstraction process while also having the capability to orchestrate the slew of incoming financial information. The good news is that artificial intelligence is now sophisticated enough to scan and differentiate pertinent lease information contained within a contract, without the need for human intervention. Our partner LEVERTON has been pioneering this technology for some time now, its deep learning platform is able to structure and manage corporate documents in more than 30 different languages. For companies looking to save time, money, and ensure the integrity of their lease data when becoming IFRS 16 compliant, this technology is nothing short of transformative.

Full compliance begins in earnest at the abstraction stage. Software and automation offers a peace of mind that manual labour simply cannot match at such a crucial time. It gives companies a platform to tackle the compliance journey together in a coordinated and collaborative fashion.

IFRS 16 is about achieving greater financial transparency. The only way an organisation can truly accomplish this is by safeguarding the integrity of its lease information. It’s simply not enough to be in a satisfactory position by ‘deadline day’, rather businesses need to be ensuring they are fully compliant at any given time, throughout time. But how is this done exactly? What are the steps that need to be taken? And what are the risks to data integrity within each of these? This blog series aims to answer these questions by breaking the compliance journey down into four identifiable stages.

In this blog, we’re looking at the steps required to ensure compliance at the identification stage.

Identification 

Preparing for IFRS 16 may seem like a daunting task – especially for large organisations that have a complex portfolio of leases – but with the right knowledge and tools it need not be. The first step towards full compliance concerns identification – this means collating all pertinent lease information captured under the new standard and readying it for calculation. Some might ask why this is necessary in the first place, especially as IFRS 16 is supposedly bringing all leases onto the balance sheet for the first time. Surely, if everything is now in need of acknowledgement it’s merely a case of getting all the contracts together and going from there?

Yes and no. All leases need to be scrutinised, in the sense that they will likely contain lease components that are considered ‘active’ under the new standard, but there will also inevitably be some contracts that contain exemptions, defined as ‘non-lease’ components. These do not need to be processed using conditions defined under IFRS 16 and auditors will not penalise those that fail to do so (these will, however, be subject to different regulatory standards). So, what actually is considered a lease under IFRS 16?

Under IFRS 16, a lease is defined as the right to use an identifiable asset for a period of time in exchange for consideration – a certain sum of money. Essentially, the new standard differentiates a lease from a service when there is a clear and demonstrable use of an asset within the duration of the contract arrangement, even if a service forms part of that same contract. In the real estate sector, for example, leased offices often have facilities, maintenance, and security services built into the contract – these are considered non-lease components and will not require acknowledgement on the balance sheet.

Even at this stage, the data integrity challenge is evident. Leases have historically been signed by many different people, with the finance department not always having visibility over these arrangements. Speaking to all the relevant stakeholders to find these leases will be a considerable task, even for small to medium sized businesses. Imagine a scenario where the identification process is delegated to ‘siloed’ teams across different sites – remember, anyone with the authority to sign leases is implicated in the compliance process, meaning there could be hundreds of individuals involved in an organisation’s IFRS 16 transition. If each of these individuals used a different form for collating and saving relevant lease information, the data integrity risks would skyrocket.

Software will give companies the opportunity to centralise the identification process and undoubtedly make the issue of adding new leases onto the balance sheet far more coordinated. In instances where changes need to be made and stakeholders are spread across the globe the benefit of this capability will be magnified further. But with a need for clarity and control, only certain types of solutions will be suitable for this task. Basic spreadsheet software, for example, will not have the capability to coordinate communication between stakeholders and will also leave the door open to data duplication and errors – and that leaves aside the potentially thousands of hours lost through wasted labour correcting corrupted lease data.

We have summarised below eleven of the core advantages that using fully featured CMMS Software (Computerised Maintenance Management System) will bring to your organisation.

1. Increased vision

By effectively utilising existing data sources and displaying outputs in a simple and relevant fashion you can increase your understanding of your assets and your organisation. Business Intelligence Dashboards and reporting tools will deliver timely information on KPI statistics from around your organisation. Relevant information can be shared with business partners and KPI reports can be created for all levels of decision maker and all types of role across the maintenance function.

2. Repair costs decreased

Regularly and appropriately maintained structures and assets which are much less prone to breakdown. Fewer breakdowns translate to lower repair costs – a direct and measurable saving. By using the advanced planned maintenance scheduling and management tools in Qube Global Software’s CMMS solutions, breakdown levels can be significantly lowered.

3. Less downtime

Less frequent breakdowns mean less downtime. Downtime can prove to be very expensive, both in terms of lost revenue and damage to the company’s brand and reputation. By implementing CMMS software with the relevant tools to schedule and carry out maintenance tasks there are proven decreases in down time, resulting in both direct and indirect cost savings.

4. Less disruption

An indirect saving, but one that is often very significant, results from less disruption in the day-to-day running of the organisation. Planned maintenance can be carried out at a pre-arranged time, when the building is empty or when the equipment is not in use. This is particularly important for organisations open to the public, such as hotels, hospitals, retail outlets and educational establishments. It is these sectors where the CMMS Solutions from Qube Global Software have established a strong market presence.

5. Fewer purchases

Well-maintained assets last longer. This longer life translates directly into lower expenditure on the purchase of replacements and renewals. The stores and purchase management functionality in a complete solution will deliver significant savings as stocks are maintained appropriately and purchasing procedures can be streamlined and adhered to.

6. Efficient management of staff headcount.

A preventative maintenance program which results in fewer breakdowns means that fewer engineers (or even contractors) are needed. A reduced headcount is also the consequence of more efficient scheduling and a reduction in the time engineers spend on administration. These are both outcomes of a well-managed preventative maintenance program and these enhancements can be delivered by Computerised Maintenance Management Software.

7. Improved safety and risk management

Regularly checked and maintained equipment is more likely to reach and stay at the required safety standard level. Accident risk is immediately reduced along with non-compliance. Improved safety minimises loss of work time through accidents and reduces the risk of penalties through breaking legislation. The Planet FM Software solution delivers a raft of features in this area from risk assessments, safety instructions, work permits, asbestos and COSHH management.

8. Increased mobile workforce productivity

Efficient use of mobile tools is key to a successful maintenance function. In a CMMS system, mobile data tools should allow efficient management of staff across large teams and allow job handling, dispatch and sign off to be undertaken easily on a remote basis. In addition to further increasing staff productivity either in-house or in a contracting situation, mobiles solutions push safety compliance elements direct to the workforce.

9. Optimised use of space

Optimising space is a key function within the role of many FMs. Software should help integrate your locations and assets with your CAD drawings and optimise space through producing ‘net internal area’ statistics. Asset information should be available for further analysis, whether graphical or in reports. With Room Booking functionality you can optimise building and resource efficiency by avoiding double-booking and ensuring that the correct services and equipment are delivered to the right place at the agreed time.

10. Assessments to reduce costs and increase safety

Annual assessments of equipment condition and health and safety risks can be used to develop condition or reliability based maintenance schedules and identify changing risks within the workplace. A CMMS system will provide tools to carry out these inspections utilising mobile data tools to record conditions, plan refurbishment maintenance and record likelihood of breakdown and risk to the company.

11. Use of the latest and proven technologies

Whether it is making sure the latest mobile data tools are integrated or access to the application is through the cloud, a CMMS solution and its provider should have the flexibility to deliver both today’s requirements and develop with you as your organisation and its environment changes. Importantly the supplier of the solution should have both the foresight and the knowledge of your business to help you adapt to the latest and proven technologies.

With so many potential clients out there with varying demands, agents need software that is robust flexible and multifaceted, and should be asking themselves: can my current technology stack manage these varied expectations?

View our infographic to find out exactly how the right technology can help meet growing customer expectations.

Property management software is transforming the way investors are able to manage their private residential portfolios. In this SlideShare presentation we explore the key benefits and how the right technology can have a direct positive impact on the bottom line.

Attracted by long-term cash flows, more and more investors are looking to develop their private rental property portfolios.

On Tuesday 11^th July, MRI Software (previously Qube Globlal Software) hosted a breakfast networking seminar and IFRS solutions session at The Shard. The event featured presentations on the importance of collaboration between finance and real estate departments when managing IFRS 16 reporting pre, and post January 2019. Attendees were also given the opportunity to network with industry peers, and explore the IFRS 16 functionality in action through informal demo sessions. Continue reading “5 Things We Learnt at the IFRS 16 Seminar | 20 July 2017” →

“Best service is no more than a mouse click away.”

Today’s generation of rental residents know what they want and are prepared to pay for the right accommodation and services. But to achieve those standards, residential property managers and investors must understand that their assets are more than numbers on a spreadsheet; in order to achieve a fully occupied apartment complex, they need detailed knowledge of resident needs, long-term planning and appropriate service levels.

One of the key factors residents consider when deciding to renew tenancies is quality of customer service. A recent survey by Engage found that poor communication and taking too long to resolve property issues are among the major frustrations reported by private sector tenants in the UK. Customer service can be dramatically enhanced by using property management software to effectively manage, monitor and communicate with residents.

Technology is increasingly being used as a key differentiator, with the best systems accommodating functionality that improves long term customer relationships. The opportunity technology offers for transforming residential property management to enhance value, service and experience is huge; with the right software, residential property can even match the service levels of the best hotels.

Widespread adoption would represent a huge step change with instantly measurable impacts for the customer experience.

Automation and convenience

Automation of billing and other communication, in line with industry best practice, removes the need for paper-based, manual intervention. This helps cut debt by enabling effective credit control and improves service charge management.

Property management software also enables a 24-hour, self-service culture. Resident portals can accommodate online concierge facilities, amenity bookings such as gym or pool usage, and desirable services like restaurant bookings, tickets or car parking. Systems can also include a responsive maintenance team and convenience offerings such as cleaning services.

This ensures the best service is no more than a mouse click away, keeping even the most demanding residents happy. It can either be done on an all-inclusive basis or for an additional charge, both of which can be accommodated in the software.

Place and community

Property management software allows residential managers to create communities that people want to live in. In a recent survey by property service provider, LOFT, 78% of residents said they “did not know their neighbours”, while 72% said they wanted to do so, suggesting a major unfulfilled need.

A property management system should include a resident portal to foster an increased community experience, delivering offers and promotions from local businesses, online forums and social media groups, and even events.

Smart living

User-defined, smart applications also have the potential to transform the resident experience, offering virtual concierge, security, and sustainability apps to control heating and lighting via smart sensors and thermostats. It is something customers are now demanding, as evidenced by LOFT’s recent survey2, which showed 66% of respondents wanted SMART controls. The latest property management technology can help meet these increasing digital demands.

In short, a human-centric approach to property management is needed in the residential sector, and the most successful businesses in this space will be those who can identify and harness the latest software solutions to improve services for customers.