Planon: Why should real estate and finance managers join forces?


There will be considerable change in lease accounting from 2019. That date will see new standards from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) come into force. This also means that the roles of real estate and finance manager is also likely to change, as each will undoubtedly need the other to cope with the challenges of the new standards…

New tasks for the new standards

This will change a finance manager’s work. Leasing contracts, which previously might have been considered less important, will now play a larger role. That is because it’s no longer simply about what an organisation pays to a leasing company each month. The finance manager now has to incorporate on the balance sheet both the valuation of the liability and of the property. That presents quite a challenge. Whereas previously he could simply report on the costs of leasing contracts, now, to be compliant with the new standards, the finance manager must also report the value of these contracts as well as the underlying information.

On the other side of this is the real estate manager, and as 2019 looms, he also needs to give much more thought to the financial impact of leasing arrangements. No longer can he just mention the leasing costs of a set of premises, but rather, he must also state the impact of those costs on the profit and loss account and the balance sheet…

Collaboration is the key to success

In practice, real estate and finance are two separate worlds. Most real estate managers prefer not to immerse themselves in all the accounting rules. Finance, by contrast, has knowledge covering a whole gamut of legislation and regulations, of which real estate is only a small part. Having a “linking pin” would appear to be a way forward – someone who speaks the language of both the real estate and the finance manager. So it could be an interesting idea to hire someone with a completely new profile. Someone who knows about both real estate and finance…

[Admin: To see other related posts, use the Planon tag.]

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