Australia’s first semi-automated lease management system is helping retailers comply with new regulations shaking-up the sector.
The introduction of AASB 16 two years ago, a standard which requires all operating leases over one year to be brought on a Balance Sheet, has placed increased pressure on retailers to improve the way they document lease obligations.
But now Australia’s first lease contract management system, Accurait, launched last month by LeaseInfo, is helping retailers meet these new obligations.
The system semi automates the process of lease extraction and management to save retailers and property managers time and allow them to better identify important clauses and extract key data.
The technology is good news for the sector, with Price Waterhouse Coopers study estimating that the retail industry will be one of the highest impacted industries by AASB 16, with up to 98% increase in median debt levels and 41% increase in EBITDA.
While other semi-automated lease management platforms exist in other countries, Accurait is the first Australian technology. The technology can save up to 30 minutes per lease and thousands of dollars over the life of a lease, according to Simon Fonteyn, managing director at Leasing Information Services.
“For Swarovski it worked it out to be 30 minutes time saving per lease. If you’re looking at once a month times, it works out at something like 30 hours-40 per lease in time saving. If you multiply that by approximately $100 per hour, it ends up at $30,000-40,000 in savings per lease.”
The technology works to increase efficiencies, whilst also improving accountability by allowing retailers to continuously update obligations. Mr Fonteyn says such technology is critical if retailers are to meet these new obligations.
“Retailers are going to have to get on top of it if want to stay in business because it’s no longer an option not to,” he said.
“Retailers can’t continue to operate the way they’re operating without some systems in place to deal with these changes. Retailers need every available efficiency measure to keep ahead of the game.”
Retail is a document-intensive industry, with retail leasing often requiring various documents from fit-out to subleases. Mr Fonteyn says that the technology enables retailers to save this documentation online – thus improving ease of access whilst also enabling the data within the document to be linked to databases without the manual labor.
“All of the information needs to be at the property managers fingertips so they know their obligations. That’s what this does, it indexes all of the relevant information and puts it at the fingertips of retailer or lease managers,” he said.
The system also helps retailers to improve compliance, by ensuring that legal obligations within leases are documented online and integrated with databases, accounting systems and other management tools.
“It’s a very document intensive industry which retailers general go to enormous lengths to negotiate deals but very little effort is put in to structure the lease information so that it can be captured as part of the workflow,” he said.