The FR sat down with Robert Michlewicz, CEO of lease optimization software provider Visual Lease, to understand why organizations are turning to technology to manage their lease portfolios.

In today's complex business environment, it’s become increasingly important for organizations to have a deep understanding of their lease portfolio and related records. How does lease data contribute to financial risk management and mitigation strategies? 

As an organization, the importance of not only understanding but pulling true value from your lease portfolio cannot be overstated. Leases are often the second-largest expense after people-related expenses, proving just how costly it can be to not stay on top of lease requirements and details. According to a recent report by the Visual Lease Data Institute, 100% of finance executives have concerns about maintaining control over their organization’s lease portfolio.

Take these two large companies as examples: Alphabet, Google’s parent company, incurred $1.8 billion in exit charges on leases in 2023, which could have been avoided by not renewing leases, as per their contract terms. Amazon saved $1.3 billion by choosing not to renew existing leases and terminating others early, actions they could only take by having a clear understanding of the terms of their lease agreements.

These examples can serve as cautionary tales, which is especially true in today’s volatile market environment when many companies are looking for ways to trim costs and appease stakeholders. Costly mistakes, such as missing a termination option or failing to question additional rent variances ahead of a deadline, can be avoided when companies prioritize lease management. Alternatively, prioritizing this means organizations can reap financial benefits and see greater value from their portfolios. 

Today, sustainability and financial performance are related in many ways. How can data regarding an organization’s carbon footprint and environmental impact inform strategic decision-making?

While demands for more corporate sustainability practices are not new, the focus on ESG and environmental impact is now more tied to financial performance than ever. According to a Gartner study, 85% of investors consider ESG factors in their due diligence. Employees and customers are also paying close attention, with 66% of consumers saying they would pay more for sustainable products. 

Earlier this year, as the U.S. began working to catch up to European standards, the SEC announced new rules requiring public companies to report on environmental-related factors in their financial statements, in order to provide investors with “consistent, comparable, decision-useful information and issuers with clear reporting requirements." Although the ruling is currently paused as the SEC defends it in court, it’s become clear just how integrated an organization’s environmental impact is with financial outcomes. 

The link between sustainability and financial performance will continue to be increasingly important as companies demonstrate progress toward ESG goals. In fact, according to the Visual Lease Data Institute, 52% of finance executives report that the ability to comply with ESG requirements and policies is their top concern or anticipated challenge, up from 44% in 2023. 

With the right tools to gather and analyze related data sets, companies can be ready to meet different reporting requirements—and avoid costly reporting errors and even audits—while achieving environmental-related goals that make a difference in business outcomes and stakeholder approval. 

How are advancements in technology reshaping the way organizations leverage their lease portfolio data? 

Many organizations are still using dated, manual technology (think, spreadsheets!) to monitor and track their leases. Thankfully, more business leaders are recognizing the importance and strategic value of leveraging their lease portfolio data, leading to more demand for technological advancements and adoption within the space.

Integrating solutions that serve as a central source of truth, provide robust controls, and automate time-consuming manual tasks can significantly empower the Office of Finance. 

These integrations can help teams navigate new and evolving reporting requirements, enhance collaboration opportunities, improve overall efficiency, streamline processes and allow for the reallocation of time and resources toward strategic decision-making and value-adding activities.

A real-world example of this can be gleaned from CURO, a leading short-term credit solution provider that faced significant workloads manually managing its extensive retail portfolio. 

The CURO team turned to Visual Lease as a strategic partner as it developed an automation strategy that centralized their lease data, allowing for quick searches for lease clauses abstracted into a complete system of record. Now, the team saves hundreds of hours every month that they put towards higher-value work, such as analyzing investments across the lease portfolio. CURO can take advantage of emerging technological capabilities, such as AI-powered data extraction or the ability to integrate this data with other systems, for more robust business insights. 

It’s clear finance teams cannot function in silos. Collaboration with real estate and sustainability teams is essential for various opportunities and reporting requirements. How do you see the Office of Finance continuing to evolve over the next five to ten years?  

The Office of Finance has evolved significantly over the past few years and I believe will continue to do so as responsibilities, technology and business needs also evolve. 

One example includes the ways in which we’re already seeing finance teams become more integrated and collaborative within companies. In order to meet new environmental-related reporting requirements, finance professionals must work closely with various teams, including in real estate, sustainability and legal. Finance professionals are an important piece of the puzzle and are equipped to understand reporting compliance requirements, provide strategic recommendations to support business goals, and more. They must still work closely with teams that may be closer and more familiar with relevant data. This combination of expertise will continue to push the finance industry forward. 

There is also a digital revolution occurring in the industry, which represents a pivotal moment in defining the finance function's role within an organization today and in the future, especially when there continues to be a talent shortage. Teams that capitalize on adopting new technologies, such as automation and AI, have the opportunity to become strategic partners that drive informed decision-making, cut costs, mitigate risks, and advance organizational growth.

I’m excited to see what the future holds for the finance industry and for Visual Lease to continue to support our partners in their next phases of evolution. 

Visual Lease unifies and simplifies its customers’ lease portfolios, driving better financial and operational results. What’s next for the business and platform?

Our team is very excited about some of the advancements we’re making to continue to support our partners and their changing needs. Later this year, we will be launching multiple AI capabilities within our platform that will transform the lease management, lease accounting and sustainability reporting capabilities that we already offer. 

We’re proud to have taken our time developing these updates, rather than simply jumping on the “AI bandwagon.” We wanted to ensure these capabilities weren’t swayed by hype but rather were validated and built to solve real business problems. 

By leveraging these new AI capabilities, organizations will have the ability to streamline processes, reduce errors, proactively address issues, and optimize financial operations, benefiting multiple departments and ultimately driving more strategic outcomes.