It’s no secret that business leaders across the country are increasingly worried about today’s unpredictable economy. With persistent inflation, shifting tariffs creating uncertainty across industries and unclear prospects for future economic growth, organizations are seeking new and innovative ways to save costs and mitigate risk.
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Fortunately, they don’t need to search far. While we may not have direct control over inflation or tariffs, there are certain internal factors we can control — specifically, how we manage our leases. By prioritizing lease portfolio management, business leaders can unlock their portfolio’s full potential as a strategic asset. Let’s explore what this means practically.
Lease data key to financial flexibility during economic volatility
Although personnel costs are the highest expense for most businesses, lease portfolio and occupancy costs rank a close second. As such, these costs represent an important choice for leaders. Simply treat them as another line item or leverage them as a strategic opportunity to optimize spending.
Despite their significance, many leaders lack a comprehensive understanding of these expenditures. According to the Visual Lease Data Institute’s
This gap in understanding means leaders can’t accurately identify opportunities for savings within their portfolio. Clear, accurate and timely lease data is essential to:
- Identify and optimize underutilized assets, such as warehouses with excess capacity or leased retail spaces with low foot traffic. Unoccupied and underutilized office space is not an unusual problem to have right now, but when you shift your mindset, you’ll find that what you have is opportunity.
- Renegotiate unfavorable terms, such as options that no longer reflect market rent conditions, restrictive clauses and escalation clauses.
- Avoid costly mistakes, including automatic renewals or penalties for missed deadlines.
Why lease data is critical for forecasting and planning
Beyond cost control, lease management plays a crucial role in strategic planning. Poor oversight makes navigating the ever-changing market’s demands and conditions far more challenging.
Unfortunately, this is an area where many businesses struggle. According to the same
Many companies struggle with managing their leases because they still rely on spreadsheets or disparate systems. Nearly
Relying on spreadsheets and manual methods not only wastes time but also makes it more difficult to obtain a holistic view of a company’s portfolio — essential for forecasting and planning. In contrast, a centralized lease management system enables finance teams to access real-time data on lease obligations, variable costs and upcoming renewal windows. This capability makes it easier to predict future financial and operational needs and to make informed decisions.
Further, it enhances cross-departmental visibility, enabling finance, real estate, legal, sustainability and IT teams to collaborate more effectively. In this way, a comprehensive lease management platform can support compliance and sustainability efforts and improve coordination across an organization.
How robust lease management helps mitigate risk
While cost control and forecasting are often the most widely discussed benefits of quality lease management, risk mitigation is equally important. In our changing economic and regulatory environment under ASC 842/IFRS 16, every accounting error represents a potential cost.
Unfortunately, errors are only becoming more common as recent regulations make workloads heavier and stretch workers thinner. As a result, according to
In the face of economic pressure and volatility (coupled with daily stress and work), it may be tempting to cut corners or relax accounting processes. But beware of this mentality. Accounting errors can be costly, impacting both a company’s bottom line and its reputation.
For public companies, which face strict reporting requirements, mistakes are more than mere technical issues — they can lead to audit flags, which would cause delayed filings and erode investor confidence. Although private companies typically face less regulatory scrutiny, lease accounting errors can still result in significant financial or operational issues.
These problems are much easier to fix with the right technology. By modernizing a lease management and accounting system, organizations can:
- Automate complex calculations;
- Maintain a time-stamped audit trail of any lease modifications;
- Ensure consistency across teams; and
- Reduce the risk of human error.
Leveraging leases for resilience and growth
During times of economic volatility, lease portfolios can be much more than just another expense to manage. With the right approach, they can become a strategic asset.
Although we can’t bend macroeconomic forces to our will, we can still control how we manage our leases and leverage them to save on costs, inform our planning efforts and mitigate risk. Adopting a holistic view of our lease portfolios and streamlining collaboration with updated technology is key to weathering uncertainty, responding to change and creating value for years to come.
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