Why some businesses are still struggling with IFRS 16 lease software

On paper, IFRS 16 software should be a relief: one system that ingests contracts, measures right-of-use assets and lease liabilities, posts journals, and spits out clean disclosures. In practice, many finance teams find the road bumpy. The obstacles aren’t usually about the math—they’re about data, process, and change management colliding with a standard that touches property, vehicles, IT kit, and service contracts across the whole company.

Spreadsheets die hard

Plenty of organisations began IFRS 16 on Excel and never fully moved on. That’s risky now that portfolios have grown and contracts keep being modified. Recent market snapshots suggest adoption is mixed: one 2025 survey reports 37% of businesses use dedicated lease-accounting software while 26% still rely on spreadsheets—evidence that a sizeable minority remain manual-first despite the standard being live for years.

The three traps that trip teams up

First, data quality: leases arrive as PDFs, emails, and amendments scattered across real estate, procurement, and legal. If CPI clauses, renewal options, and break fees aren’t captured consistently, measurement goes sideways. Second, policy drift: discount-rate rules, short-term/low-value judgements, and “reasonably certain” option assessments aren’t codified—so users improvise. Third, lifecycle discipline: rent concessions, index resets, space give-backs and fleet swaps happen every quarter, but if the business doesn’t treat those as modification events in the system, the subledger and the GL diverge—fast. Practitioner write-ups and implementation guides flag these exact issues as the main reasons Excel-era habits break under IFRS 16.

What the statistics say (and why they matter)

Independent research continues to quantify IFRS 16’s punch on reported numbers. A literature review prepared for the IFRS Foundation found that, at transition, companies showed ~19.6% higher assets and ~59.7% higher liabilities than analysts had estimated under IAS 17—clear proof of the balance-sheet step-change.

Sector studies are consistent: EY observed average asset increases of ~14% for airlines/retail/shipping, and ~6% for telecoms after adoption, highlighting why multi-site and fleet-heavy groups feel the most pressure to industrialise their process.
Smaller regional samples echo the theme: a Baltic study found +8.68% assets and +13.03% liabilities on average.

And yes—EBITDA moves too. Multiple analyses (including Deloitte-cited work and later academic pieces) report double-digit EBITDA uplifts with ~30% rises in net debt in some samples, which explains the scrutiny from lenders and audit committees.
Bottom line: when the numbers swing this much, controls, audit trails, and consistent assumptions aren’t optional niceties; they’re table stakes.

Why software still “fails” (even when the product is fine)

When finance says the tool isn’t working, the root cause is often upstream. Lease data owners outside finance aren’t trained to flag modifications; legal signs amendments but doesn’t push them to the system; AP changes payment terms without a remeasurement ticket. The software then reflects yesterday’s contract, not today’s. Implementation frameworks emphasise building a single intake path, codifying discount-rate governance, and running a parallel close so errors surface before go-live. Teams that skip those steps blame the app; teams that follow them get boring month-ends. You need an all encompassing IFRS 16 lease software that doesn’t consistently fail or make simple mistakes.

The KPI shock and covenant questions

IFRS 16 raises EBITDA (expense moves from rent to depreciation + interest), but increases reported debt and leverage ratios. Analysts and lenders often ask for “pre-IFRS 16” views or adjusted EBITDA to restore comparability. Thought pieces aimed at CFOs stress making those reconciliations explicit—e.g., backing out lease depreciation and interest to show underlying performance—so board and bank conversations don’t turn into debates about accounting side-effects.

Audit pressure isn’t helping

Higher inspection scrutiny keeps the bar high. While inspections cover more than leases, regulators have flagged elevated audit-deficiency rates in recent cycles, keeping auditors conservative on estimates and evidence. Translation for controllers: your lease subledger and documentation have to be airtight—source contracts attached, rate policies documented, and remeasurement logs complete—or you’ll spend close week explaining rather than closing. You can read more about that in The Wall Street Journal. 

What to Ask Vendors Before You Commit

Before you switch (or finally leave spreadsheets), pressure-test vendors with practical scenarios and proof points. Ask for short, concrete demos and artifacts that show the software will hold up during real month-ends, not just a sales deck. Specifically request:

• A live remeasurement walkthrough (CPI reset, partial termination, extension) with the resulting journals and audit trail.
• Discount-rate governance: how incremental borrowing rates are stored, versioned, and locked each period.
• Disclosure packs you can export (maturity analysis, roll-forwards, non-cash movements) and how late changes flow through.
• ERP connectivity: show native posting to your GL (e.g., NetSuite, SAP, Oracle, Dynamics, Xero) and how mapping is controlled.
• Multi-entity and currency handling including eliminations and translation, if you consolidate.
• Embedded-lease detection tools (questionnaires/rules) and how they’re governed.
• Controls: role-based access, maker/checker approvals, and an immutable change log you can hand to auditors.

How the teams that succeed set themselves up

They treat lease accounting as an operational workflow, not just a calculation. One owner in finance owns the subledger; legal and real estate submit changes through forms that feed the system; treasury updates IBR curves quarterly; AP’s payment calendar is reconciled to the subledger; and FP&A consumes reports for planning and covenant headroom. Data capture uses templates that force every required field (index, option dates, termination penalties). The software is configured once and locked behind maker/checker approvals. After that, the process is just…routine.

If you’re about to switch platforms—or finally leave Excel

Start with a short portfolio inventory and a scoping call: how many contracts, how many amendments a year, how many entities/currencies? Ask vendors to show remeasurement flows (partial terminations, CPI resets), dual-reporting if needed, ERP connectors, and disclosure packs. Then run one month in parallel and compare journals line by line. It’s unglamorous, but it’s the difference between “IFRS 16 keeps breaking” and “IFRS 16 just runs.”