There’s a New Accounting Rule and It’s Adding Trillions in Liabilities

Earlier this year, companies are required to record operating leases, such as equipment, office space, planes, and cars. It’s estimated that this new rule will pull up to $3 trillion into the spotlight, expenses that were previously often buried in footnotes rather than recorded on balance sheets.

Up to this point, companies were only mandated to record leases that led to the purchase of the asset. The Financial Accounting Standards Board has enacted this change to make it easier for investors to evaluate companies’ financial obligations.  

According to the International Accounting Standards Board, U.S. public companies are committed to $3 trillion in operating leases. Companies with the largest amount of operating leases include restaurants and retailers.

Leverage, which is measured in the ratio of debt to earnings or debt to equity, is fundamental to evaluating a company’s risk. This accounting rule change may force investors to alter the way they assess criteria to make investment decisions.

MSCI Quality index employs debt to equity as one of the major metrics in ranking companies, and if a company’s debt to equity ratio changes significantly as a result of this new accounting rule, it could get screened out of the index. In spite of that, Kevyn Dillow, accounting analyst at Moody’s Investors Service, clarifies that credit quality is not changing as a result of this new rule.

Adding another layer of complexity: some data vendors have yet to incorporate lease liabilities into a company’s total debt amount, and some don’t plan on it even in the future. This means that different platforms could ultimately run very different numbers, leading to inconsistencies in data metrics, which is a concern for many.

Flexi

Accounting rules change often, and Flexi knows you need software that keeps up. Whatever industry you work in–whether it be financial services, healthcare, insurance, or banking–Flexi can help keep you on top of the most current regulatory measures.,

Flexi’s powerful accounting software was built to simplify the complex processes that accountants face every day. Flexi understand how stressful the period close is, how complicated multi-entity books can be, and how frustrating audits are when accurate reporting is not easily available.

A laser focus on finance and accounting software has enabled the Flexi  team to scrutinize every step of the accounting process, and develop a solution designed to simplify every task. This “process-driven” approach delivers tremendous benefits to finance teams, including a faster, more accurate financial close.

Submit your information and get a demo of the Flexi suite today.

Are New Accounting Rules Causing Chaos for Some Companies?

New accounting rules as of December are changing how companies account for revenue from services and sales. These changes were in the works for over a decade and situate the U.S. closer to international guidelines. For multi-entity and especially international companies, these changes can only benefit the bottom line and simplify accounting processes.

The new policies lead to an obvious change in how businesses conduct their operations so they remain compliant with current regulations. This also leads, in some cases, to increased expenses–upwards of $1 million for some–in the compliance measures.

One change with these regulations is that companies must more thoroughly account for costs related to sales, including discounts, marketing efforts, and more. This is understandably altering how some businesses provide and account for subscription-based sales. While some companies believe these regulations will ultimately increase their revenues, others aren’t so sure.

Some companies are communicating the new regulations with their investors to be transparent on how their finances may be affected in the future, while still others are opting to change their business operations wherever possible, rather than their expected revenue forecasts.

How Flexi keeps you compliant

At Flexi, we understand that regulations are always changing and evolving, and software should help keep you compliant no matter what industry your business operates within.

Through our secure, enterprise platform, Flexi automates the entire accounting workflow process and delivers ROI in months. As a result, your finance team can expect to spend far less time on the close, consolidation, and reporting processes and more time being strategic and proactive.

With Flexi, you won’t be stuck with a costly system that leaves you unable to adapt to changing market or business needs. Flexi offers extreme flexibility in every way, including flexibility with a changing marketplace and changing regulatory needs. From deployment options, implementation and setup of business rules, to integrations with other systems, Flexi has got you covered.

With Flexi, you can expect a complete audit trail and compliance documentation, among many other benefits. Flexi provides immediate access to all details behind a transaction. Because each accounting module is part of the same system (including our general ledger), you can easily drill down into all transactions and trace all the way back to the original journal entries, including a visual map of the workflow and approvals.

Learn more about Flexi’s solutions today. Call 800-353-9492.

SEC Approves New Accounting Rule – This is Why Compliance Is Important!

As an accounting professional, you already know the importance of compliance, and now, compliance is as important as ever. The Securities and Exchange Commission (SEC) gave final approval in October 2017 to a regulation that requires auditors to tell investors about what they learn when they audit a company’s books.

The requirement calls for auditors to inform investors about “critical audit matters,” which are defined as any area of a company’s finances that were found to be especially challenging, complex, or forced auditors to make tough judgment calls.

Flexi is your accounting compliance software

Flexi software is designed with compliance and regulatory measures in mind. You can rest easy knowing your business is relying on a software solution that prioritizes compliance.

Flexi delivers all the rich features you’d expect in a top tier accounting solution, but without the high cost. With quick implementation that can be deployed on-premises, in the cloud or in a hybrid environment, Flexi will not only simplify your accounting processes today, but also will have you ready to adapt quickly to market or business changes in your future.

Seamlessly integrate Flexi software to your core system to ensure that financial statements are accurate, consolidations are error-free, and efficient processes are in place. Make sure your business retains visibility and transparency with expenses.

With Flexi Financial Reporting and Analytics software, your team can:

  • Gain Efficiency – Streamline the AP process by reducing time-consuming, error-prone manual processes, and converting them into electronic “touch-it-once” automated events.
  • Empower Management with Information – Securely distribute reports to management, providing the specific data needed to effectively and efficiently run their departments.
  • Analyze Your Business – Analyze financial data to view business performance by business line, geography and account.
  • Identify Trends – Use visualization to identify past trends that showed success and to recognize areas of improvement.

Flexi

Saving time is important when your accounting team is under pressure to perform. Flexi offers a full suite of products to help your accounting staff perform and deliver–and save time while doing it.

With Flexi, you can streamline and automate labor-intensive financial management functions using accounts payable, general ledger, project management, and fixed asset solutions.

Flexi is an industry leader for a reason. With expertise in all aspects of accounting and 25 years experience, the Flexi team can offer the best of the best. Even better, Flexi offers cloud-based web services that not only streamline processes, but also make data accessible 24/7 from any device with an internet connection.

Learn more about Flexi accounting software solutions, or call 800-353-9492 to set up a demo today.

How Does your Company Beat the Finance Compliance Conundrum

Compliance is important to you as an accounting professional. Keep abreast of the latest regulation and compliance standards by using Flexi.com’s suite of products and services.

The banking industry is one of the most regulated industries in the U.S., and the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the FDIC keep close watch on regulation and compliance.

Seamlessly integrate Flexi software to your core system to ensure that financial statements are accurate, consolidations are error-free, and efficient processes are in place. Make sure your business retains visibility and transparency with expenses.

With Flexi Financial Reporting and Analytics software, your team can:

  • Gain Efficiency – Streamline the AP process by reducing time-consuming, error-prone manual processes, and converting them into electronic “touch-it-once” automated events.
  • Empower Management with Information – Securely distribute reports to management, providing the specific data needed to effectively and efficiently run their departments.
  • Analyze Your Business – Analyze financial data to view business performance by business line, geography and account.
  • Identify Trends – Use visualization to identify past trends that showed success and to recognize areas of improvement.