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Money Forward Cloud Lease Accounting: Preparing for New Lease Standards

In a significant announcement, Money Forward, Inc. revealed plans to launch its new service, the Cloud Lease Accounting, by the end of 2025. This service aims to assist businesses in complying with the new lease accounting standards set to take effect on April 1, 2027. On September 17, the company opened its service page, marking the start of registration for users eager to adopt this tool.

The upcoming lease accounting standards necessitate thorough preparations in various areas such as contract information gathering, asset valuation, and proper accounting entries. Recognizing this challenge, Money Forward has made the strategic decision to develop the Cloud Lease Accounting service, which comes equipped with essential functionalities required for a smooth transition to the new standards.

Key Features of Cloud Lease Accounting

The Cloud Lease Accounting service encompasses several critical features aimed at significantly reducing the workload while ensuring accurate compliance with the new standards:

• - Survey Forms: Users can easily input contract details alongside grounds for lease assessments into the system. This organized management reduces the risk of oversight while streamlining the research process.

• - Lease Ledger: The service allows companies to manage all leases, including short-term and small-value contracts. This centralized approach facilitates swift oversight and effective management of a potentially complex array of leases.

• - Lease Assessment and Approval Functionality: Automatic lease assessments are processed based on the collected contract information, mitigating inconsistencies and errors that may occur with individual reviews. Moreover, these automatic assessments can be validated through an approval mechanism, ensuring high levels of internal control and accuracy.

• - Calculation of Right-of-Use Assets and Lease Liabilities: The new service automates the process of calculating present value, making it easier to derive the required asset and liability figures swiftly. Financial impacts can also be estimated with a single click, beneficial for internal reporting and communication with management.

• - Automated Journal Entry Generation: The service automatically creates journal entries for right-of-use assets and liabilities upon a new contract, as well as for monthly depreciation and liability repayments. This feature improves efficiency and accuracy by eliminating manual transfer work, thereby enhancing month-end closing processes.

Notably, Money Forward has already submitted a patent application for key functionalities related to lease accounting, highlighting its commitment to innovation in this area.

Background and Implementation Strategy

Starting April 1, 2027, a new lease accounting standard will be enforced mandatorily for public and large companies. This implementation requires substantial workload and alignment between legal and accounting departments along with system setups within the year leading to the application date. Recognizing the urgency for early preparation among firms, Money Forward aims to not only support its existing users of the Cloud but also provide a solution for users of other accounting systems to seamlessly transition to the new standards.

This initiative stems from practical know-how gathered through a dedicated project for early adaptation to the new lease accounting standards formed within Money Forward's accounting division. The company is committed to serving its users with practically applicable solutions for their operational needs.

About Money Forward

Founded in May 2012, Money Forward, Inc. is headquartered at 3-1-21 Shibaura, Minato, Tokyo, and is led by CEO Yosuke Tsujii. The company specializes in platform services and continues to innovate within the financial technology sector.

For more information, visit the Money Forward Cloud Lease Accounting service site to learn how your business can prepare for the upcoming changes in lease accounting standards effectively.