Optimizing lease management: Three ways to manage leases effectively in SAP
Lease agreement management: Lease agreements represent the right to use an asset that is transferred to a lessee for a specific period of time. The lessor remains the legal owner of the asset and receives consideration for the transfer of the rights of use.
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A distinction can be made between finance leases and operating leases:
Leasing contracts can be managed in SAP using the SAP Flexible Real Estate (RE-FX) module, among other things. RE-FX has mainly been used by large companies with real estate assets worth over €1 billion. However, the license costs for using it are correspondingly high. The module also has a complex customizing and user interface. For companies, managing lease agreements via SAP RE-FX is therefore only recommended if the module is already in use and sufficient expertise is available within the company.
As a rule, there are two options for medium-sized companies to manage lease agreements in SAP:
The complete mapping and management of lease agreements in SAP Treasury and Risk Management is particularly recommended for companies that already manage other financial products such as money market, securities, guarantees, and foreign exchange via the module. This is because there are no additional license fees and no new expertise is required. In addition, lease agreements can be managed efficiently in the SAP standard, resulting in seamless integration. Standard product type 550 is used for mapping, which, when configured correctly, can map both IAS16- and HGB-compliant lease agreements. In addition, special cases such as retrofitting, extension, or total loss during the term can also be mapped without any problems. The module offers all the necessary functions with regard to workflows, valuation, posting, and payment.
If a company does not yet use SAP Treasury and Risk Management, the UNIORG Contract Management Add-On is recommended for mapping and managing leasing contracts. It offers the possibility of uniformly mapping various contracts (e.g., leasing contracts) and managing them in a central cockpit, as well as providing you with a connection to SAP FI, CO, and FI-AA.
The presentation of balance sheets and income statements may vary depending on accounting regulations, particularly due to different treatments of lease agreements. The use of SAP enables transparent presentation and tracking of accounting in accordance with various accounting regulations.
Leasing agreements represent the right to use an asset that is transferred to a lessee for a specific period of time. The lessor remains the legal owner of the asset and receives consideration for the transfer of the rights of use. A distinction can be made between finance leases and operating leases.
Companies have three options for mapping and managing their lease agreements in SAP. They can be managed using the SAP Flexible Real Estate module, Treasury and Risk Management, or UNIORG Contract Management.
The treatment of lease agreements is based on the respective accounting standard. Due to the differences, balance sheets and income statements may differ from one another depending on the accounting standard applied. One of the main differences between accounting in accordance with HGB and IFRS 16 is the lack of distinction between operating and finance leases under the IFRS 16 leasing standard, which is a fundamental criterion for the different accounting treatment of lease agreements under HGB.
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