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Article Dean Dorton

Are you ready for the new lease accounting standard – known as FASB Accounting Standards Codification (ASC) 842, Leases?

What is changing?

The new lease standard requires a lessee to record all leases on the balance sheet, unless the lease term is 12 months or less. This represents a significant change from historical lease accounting rules, which only required assets and liabilities to be recorded for capital leases, but not for operating leases. Overall, the new standard should not change a company’s income statement or cash flow statement, but it may have material impacts to the balance sheet.

The intent of the new standard is to reduce the amount of off-balance sheet activity, providing financial statement users with greater transparency regarding the leasing activity and associated rights and obligations of lessees. Unintended consequences may include significantly impacting financial ratios and compliance with loan covenants.

When are the lease accounting changes effective?

The new standard will be effective for non-public business entities beginning with calendar year 2022. Many implementation lessons can be learned from public entities, as they implemented the leasing standard prior to private companies being required to implement the standard. To ease adoption, companies can elect a transition method whereby a cumulative-effect adjustment is recorded to opening retained earnings in the period of adoption, thus precluding restatement of prior periods.

Gathering the lease portfolio can be extremely difficult

Identification of a complete lease population is the first, and often most challenging, step in implementation, due to:

  • Decentralization of agreements and data for leases historically classified as operating leases
  • The requirement to search for embedded leases in service agreements and other contracts

An embedded lease could be present if a contract contains an explicitly or implicitly identified asset, and the company controls the use of this asset. For example, transportation and delivery service agreements could contain an embedded lease if a specific vehicle must be used to transport your company’s inventory. Cloud computing service agreements could contain embedded leases if specific IT servers are dedicated to your company.

Additional implementation challenges

Other common issues include:

  • Extent of effort required to adopt – Implementation frequently requires 6 – 12 months of cross-functional involvement, which can be a significant burden coming on the heels of the new revenue recognition standard.
  • Developing an IT solution to manage compliance – Spreadsheet-based lease management tools often are no longer sufficient, given the increase in the volume of leases on the balance sheet and the complexity of measuring such assets and liabilities. Lease accounting software may be required to successfully manage all lease data.

Preparation for the new lease accounting standard should start now.  Dean Dorton welcomes any questions about how the new standard will impact your business. Learn more about us, and our services at the link below:

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Article Dean Dorton

A focus on sustainability is changing all aspects of our world. What is your company doing to promote sustainability? How are you measuring the effectiveness of your sustainability program and ensuring accuracy in reporting? Have you made commitments to consumers regarding sustainability and are you transparent with reporting actions taken to follow through on those commitments?

As we’ve discussed before, many public and private companies have seen the need to implement Environmental, Social and Governance (ESG) programs. There is an increase in ESG activity including transparency about current impacts and plans for the future.

Here are some example recent stories:

  • University College Dublin is using Artificial Intelligence to validate companies’ environmental claims. Greenwashing means disingenuous claims of being environmentally friendly to outright falsehoods. The group places companies in one of several categories: green leaders, hidden green champions, green incrementalists or potential or probable greenwashers. The group’s results show a high likelihood of greenwashing in 95% of statements they analyzed.
  • Samsung to eliminate plastic from its smartphone packaging by 2025. Other goals include incorporating recycled material in all new smartphone products, achieve zero waste to landfill and reduce the standby power consumption of its smartphone chargers to below 0.005W when a device is fully charged.
  • Prague is building its first 3D printed playground which will feature recycled concrete. China has recently constructed a 3D retractable bridge. The Bluetooth-controlled bridge is comprised of 36 3D printed triangle panels. The Netherlands features the country’s first 3D printed stainless steel bridge.
  • Stanford creates new school for study of climate and sustainability which will open in the fall of 2022. The school will foster innovating new technologies to solve energy, climate and sustainability challenges.
  • The Big 3 pledge 40-50% Electric Vehicle sales by 2030. GM aspires to be fully electric by 2035.

While these examples of ESG are on the larger scale, even small and medium businesses can make impactful sustainability goals aligned and reported on through the ESG metrics.

To find out more about the metrics and how we can help you achieve ESG success, click the button below.

More about the metrics

Article Dean Dorton

Cash management can mean different things to different people. It can also have different faces depending on what sector your business operates in. However, at its heart, cash management is the process of overseeing and controlling the inflow and outflow of money through your business—and that can lead to problems.

Read on to discover some of the risks associated with improper cash management and how your company can overcome them.

Three Common Risks of Improper Cash Management

  1. Manual Processes: Too many of today’s modern businesses are still managing their cash flow manually. Whether this means your employees are counting cash by hand, or your CFO is manually entering data into a spreadsheet to track cash flow, these processes can lead to multiple issues—including human error and theft. While we would like to believe that our employees and associates are too-well trained and honorable to make mistakes or act dishonestly, manually tracking and managing your business’s cash is asking for trouble.
  2. Increased Labor Costs: Receiving incoming cash and managing its flow can be an expensive proposition. It’s time-consuming and requires a lot of man-hours and personnel. Your company may even be employing too many people to do this job effectively. Having too many hands in the proverbial pot not only increases the risk of error, but it also results in high labor costs and cuts into your bottom line.
  3. Outdated Information: If your company is operating and making decisions based on last month’s—or even last week’s—data, you’re relying on out-dated information. The future of cash management requires real-time figures and data. Relying on old information puts your company at risk and hampers your ability to properly predict future growth.

How to Address These Issues

The good news is that there is a simple, cost-effective way to address each of these risks. By employing best-in-class financial management software, your company can mitigate, or even eliminate, these issues. Your company needs a comprehensive accounting and financial management software solution with superb cash management capabilities. A best-in-breed option, like Sage Intacct, will replace manual procedures with automated processes, reduce labor costs, and provide real-time reports and statistics.

Sage Intacct’s cash management enables companies of all sizes to see transactions across all checking and savings accounts, as well as credit cards—providing a complete, real-time picture of the company’s money flows. Finance teams can easily import statements from all their financial institutions and automatically reconcile checking, savings, and credit card accounts to spot exceptions, manage bank errors, monitor for fraud, and maintain accurate cash balances. By streamlining payment processing and employing customizable dashboards, Intacct enables the finance team to save time that can then be put toward more value-added tasks.

Defuse The Legacy Software Minefield By Turning To Dean Dorton

Switching to best-in-class financial management software, such as Sage Intacct can not only help you navigate the minefield of legacy software, it can disarm it completely. Streamline your resources, lower IT costs, improve confidence, and save time as you move from outdated systems and into your future.

Contact our experienced value-added reseller (VAR) for a free consultation today.

Learn more about Dean Dorton’s Accounting Software services and products:

Accounting Software

Dean Dorton ERP Team
erpsales@ddaftech.com

Article Dean Dorton

Using legacy software can be like walking through a minefield. The terrain looks familiar, comfortable, and perhaps even safe—but costly issues often lurk within outdated systems. Some of these latent problems include staffing requirements, support, and maintenance obstacles, cost of time, and decreased productivity. Consider how these challenges can damage your business:

Headcount and Staffing Dilemmas

Legacy software isn’t adapted to today’s fast-paced digital world. It often takes years to become fluent in its use. Because legacy accounting solutions require specialized training and skill sets, hiring and staffing can become an issue. Finding employees who know these systems is difficult, and training new-hires into proficiency is a lengthy process. This often transfers into the need for multiple staff positions in order to operate the software. As headcount rises, your bottom line falls.

Support and Maintenance Obstacles

In addition to the hurdle of operating obsolete software, legacy systems need to be maintained. If your servers go down, your business lurches to a stop. Technicians either need to be called in or kept in-house—both of which are expensive propositions. Even if the system is up and running, you may face frequent service problems as the vendor terminates support for the aging software. All this adds up to a bulging IT budget and a maintenance nightmare.

Cost of Time and Decreased Productivity

Legacy software is notoriously clunky and non-intuitive. It takes time and effort to operate. Glitches, lag-time, and lack of mobility plague its users. Legacy software also doesn’t play well with modern applications, which means little to no automation. Data entry is almost always manual, and therefore, error prone. When employees are forced to spend their time laboring over these time-consuming processes, they can’t focus on strategic activities that boost your productivity. 

Defuse The Legacy Software Minefield By Turning To Dean Dorton

Switching to best-in-class financial management software, such as Sage Intacct can not only help you navigate the minefield of legacy software, it can disarm it completely. Streamline your resources, lower IT costs, improve confidence, and save time as you move from outdated systems and into your future.

Contact our experienced value-added reseller (VAR) for a free consultation today.

Learn more about Dean Dorton’s Accounting Software services and products:

Accounting Software

Dean Dorton ERP Team
erpsales@ddaftech.com

Article Dean Dorton

There’s an old saying that everyone loves an underdog. We like cheering for the downtrodden and urging on the slowest runner. However, being the underdog in today’s cutthroat world of business isn’t usually a feel-good story with a happy ending—especially if you’re a finance leader who senses their company is lagging behind the rest of the pack. If this sounds familiar, you’re not alone. In fact, the majority of CFOs feel they aren’t doing a good enough job at keeping up with change.

Read on to learn about data-driven decision making and how you can use it to propel your organization into the future.

What Is Data-Driven Decision Making?

  • Simply put, data-driven decision making combines the right people with the right processes and the right technology:
    • People: Forward-thinking companies are looking for team members who are curious, creative and analytical. They need people who will monitor data, identify trends, and hypothesize the best ways for their company to succeed.
    • Processes: Today’s financial strategies need to use leading-edge analytic techniques and technologies effectively
    • Technology: Data-driven technology must employ automated financial operations, a multi-dimensional analysis of key metrics, and coordinate data with other systems in real-time

Why Data-Driven Decision Making Is Essential?

Gone are the days when financial leaders had the luxury of focusing on the past. Backward-looking statements and manually entering last month’s figures into an Excel spreadsheet are outdated practices. Knowing what your company’s figures looked like yesterday isn’t enough.

You need to become a data-driven strategist who uses cloud-based financial software with real-time reporting and custom dashboards to keep pace with what your company is doing right now. Not only that, you need to become a technology futurist. By taking advantage of best-in-class financial software, you will be able to use predictive analytics to guide your forecasts and strategically plan for your future.

In fact, Jason Miller, our Business and Technology Consulting Director here at Dean Dorton, says, “Data-driven decision making not only helps with the now, it tells your organization where to go next. Imagine being able to predict where and when to make your next investment. That’s the kind of power data-driven decision making can give you.”

Crossing The Finish Line

The advantages of data-driven decision making are clear. Your company doesn’t need to be the underdog. Let our team help you sprint into the future with best-of-breed financial software provided by Sage Intacct. Contact us for a free consultation today.

Download the E-book – Sage Intacct for the Data-Driven Finance Leader:

Download the E-book

Learn more about Dean Dorton’s Accounting Software services and products:

Accounting Software

Dean Dorton ERP Team
erpsales@ddaftech.com