NetLessor - Month End Playbook

Use Case 

It is easy to miss steps when going through your month end processes. We have provided the checklist below as a baseline of what to check and do regarding your leases to close your books every month.

Month End Playbook

Optional Step: Confirm your bundle is up-to-date.

1. Verify all leases are accounted for in the system. Specifically look at any Pending leases to verify they should not be active in the current month.
   1. We recommend reviewing this by navigating to NetLessor > Lease Management > Lease List. Change the view to the "Netgain Preferred Lease List". You are then able to filter and can filter by the "Pending" status. View full size  
   2. If any leases need to be started in the current month, you will need to generate schedules for all new leases. See our guide on how to create a new lease record and our guide on how to mass generate schedules. 
   3. Commence new leases. See our guide on how to commence leases for more detail.
2. Verify all modifications to leases for the month are processed. If any leases need to be modified, see our guide on how to modify leases.
3.  Verify any leases that are ending early have been terminated.If any leases need to be terminated, see our guide on how to terminate leases.
   1. We recommend reviewing this using the early termination report.
4.  Verify all leases that are at term end are closed out. These leases will have a Complete status. If the leases need to be closed out in the current month, they will have the status Pending Close Out.
   1. You can see which leases have reached the end of their lease in the month and need to be closed by navigating to NetLessor > Mass Update Leases > Mass Close Out Leases. 
   2. All leases with status "Pending Close Out" will be listed. Choose the Effective Date you want the leases to be closed on. Select leases you want to close and press Close Out. 
   3. For more detailed instructions, see our guide to mass close out leases.
5. Run the monthly journal entries for the month.A detailed explanation is found in our guide for running monthly journals for Operating, Sales-Type, and Direct Financingleases.
   1. Navigate to NetLessor > Process Monthly Transactions > Monthly Lease Journals.
   2. Verify the Period is the current month. Check the box "RUN ALL MONTHS UP TO AND INCLUDING" if you want to run journal entries for all previous months (in case prior months have been missed) as well as the current month. If journals have already been run in previous periods, this will not affect those journal entries.
   3. Select Mark All to select all leases with a payment in the selected period.
   4. Press Generate Transactions. View full size  

      Approvals Your company may have permission settings such that approvals are necessary to run journal entries. See our guide on approving journal entries for more detail.

       
6. Run the monthly short term journal entries if applicable. A reversing journal entry is recorded and tagged to each lease reclassing the short-term portion of the lease receivable from long-term to the defined short-term lease receivable. See our guide on how to book short-term reclass journal entries.                                                                                                                                                                                                                                                                                                                      

   Timing Short-term reclass entries are typically run on a quarterly or annual basis. They can be run monthly if desired.

    
7. Reconcile clearing accounts. Verify any balance in the clearing accounts are appropriate and expected. We recommend using the following reports to review the month-end balances in your clearing accounts:
   1. Lease Receivable Clearing Reconciliation. This report shows lease payment activity by lease. This activity should net out to zero for each month if the correct payments are received and NetLessor schedules are correct. 
      • Valid Difference: You may have a balance in the lease receivable clearing account due to timing differences with payments. Prepayments for leases will remain in the clearing account until the period when the payment is due.
   2. Lease Capitalized Initial Direct Cost Clearing Reconciliation. The Lease Capitalized Initial Direct Cost Clearing Reconciliation Report is used to review the end-of-period balances in the Lease Capitalized Costs or Prepay Clearing Account by Lease. This activity should net out to zero for each month if the correct payments are made and NetLessor schedules are correct. 
      • Valid Difference: You may have a balance in the Lease Capitalized Costs or Prepay Clearing Account due to timing differences with payments and lease commencement. Booked initial direct costs will cause a standing balance in the Lease Capitalized Costs or Prepay Clearing Account  until the lease is commenced.
   3. Inventory Clearing Reconciliation. The NetLessor Inventory Clearing Reconciliation Report is used to review the end-of-period balances in the Inventory Clearing Account by Lease. This activity should net out to zero for each month if the correct values for all fields have been entered on the lease record and the NetLessor schedules are correct.
8. Reconcile all lease activity.The subledger needs to tie to the general ledger (GL) at the end of every period. We recommend using the following reports to tie out the Lease Liability, ROU Asset, and Lease Expense:
   1. Net Investment in Lease Ledger Detail. The Net Investment in Lease Ledger Detail Report is used to provide the sum of Net Investment in Leases in a given time period. 
   2. Deferred Rent Rec. (Deposit Liability) Ledger Detail. The NetLessor Deferred Rent Rec. (Deposit Liability) Ledger Detail Report is used to provide sum of Deferred Rent Receivables for leases in a given time period. 
   3. Capitalized Initial Direct Costs Ledger Detail. The Capitalized Initial Direct Costs Ledger Detail Report is used to provide the sum of Initial Direct Costs for leases in a given time period.
9.  Run disclosure reports. We recommend using the following reports to gather necessary disclosure information:
   1. Undiscounted Lease Maturity. The Undiscounted Lease Maturity Report summarizes the future payments of all leases by lease type and classification in a given time period.  
   2. Weighted Average Rate Summary. This search provides a summary calculation of weighted average rate which are required footnote disclosure items (valid for single currencies only).
   3. Weighted Average Term Summary. This search provides a summary calculation of weighted average term which are required footnote disclosure items (valid for single currencies only).