Source: Forbes —
Poor management of your real estate leases exposes your business to a range of risks including unexpected terminations, defaults and overbilling by lessors. And with new lease accounting rules requiring leases to be reported as assets and liabilities on the balance sheet, poor lease management can also result in inaccurate financial reporting. With 62% of companies expecting audit fees to increase this year, not keeping tight control over your leases can result in significant additional costs.
To protect your credibility and avoid unnecessary fees, you must keep track of your leases’ major clauses and risk items. This is not easy and becomes exceedingly difficult the more leases you have. Leveraging a lease management system can streamline processes and lower the risk of human error, resulting in lower audit fees. Following are the top eight risk items I see within a commercial real estate lease: