Staying compliant when managing leases, especially when you have 100+ buildings, can quickly become an enormous task. Regulations change often (especially IASB and FASB-standards) and the Excel spreadsheet you use to track your properties can’t alert you about the new rules. Lease accounting platform LeaseQuery, designed by accountants, helps you manage and reduce the financial risk associated with lease portfolios with features such as critical date alerts, immediate new lease accounting rules transitions, and unlimited reports.
CEO George Azih had his “Aha!” moment while working in the accounting research division of a Fortune 500. “We spent several years building, changing and validating our calculations to ensure they were accurate,” says Azih. “Finally, in 2016 (after 10 long years), the boards issued a final version of the rules, which resulted in our accelerated growth. We started selling our software to customers in 2015 and accelerated our hiring and sales in mid-2016.”
The startup is already profitable with $250K+ in sales just last month and growing exponentially with several hires in the last few weeks. According to Azih, they are on track to grow over 400 percent this year.
Here, the LeaseQuery team shares more about how their platform can help you get the math right, their rapid growth, and how they are impacting a $2 trillion market.
What’s your current funding situation?
We are 100 percent bootstrapped and are fortunate enough to fund our growth with profits. Due to our unique lease accounting expertise, our Atlanta-based company has been able to grow quickly since we started selling in 2015.
What’s your pitch?
LeaseQuery provides a SaaS-based lease accounting solution to help companies, including several of Fortune 500, manage their leases and comply with the newly-issued lease accounting rules. The change in lease accounting will result in an estimated $2 trillion dollars on the balance sheet of companies.
We not only help organizations understand how much of that $2 trillion dollars to record, but we also provide all of the required reports and disclosures they need going forward to comply with the new regulations year after year. Simply put, LeaseQuery is the “easy button” for lease accounting.
What problem are you solving?
Lease accounting regulations have changed for the first time in 40 years, and the change is a BIG one. Companies are now required to record the liabilities for all leases on their balance sheets. Here’s a simplified analogy: Imagine you sign a two-year lease for an apartment where you pay $1,000 per month. This rule requires that your credit report show that you have a loan of $24,000 from your landlord, even though all you did was sign a lease and didn’t borrow any money. Once again, this is an oversimplification; for one thing, it affects companies, not individuals. Notwithstanding, the effect is going to be a combined 2 trillion liability (loan) on companies’ balance sheets, and it’s not as simple as $1,000 over 24 months as in our example. The math’s a LOT more complex. We help companies get the math right.
How’d you get the idea for it?
Our founder and CEO, George Azih, was working in Technical Accounting and Accounting Research at a Fortune 500 company here in Atlanta. During his time there, he found out about the upcoming regulation change and realized the enormous impact it would have and how unprepared companies were to comply. Additionally, as he searched for software to help solve this problem, he found the only options available were built by real estate people who did not understand accounting.
How is your platform currently impacting the market?
In the example we gave above, we used an apartment lease because that is an easy asset to picture. In reality though, companies lease a lot more than buildings. Why? Well just like individuals, it’s easier and cheaper for companies to lease or rent than it is to buy. Let’s think about a soda manufacturer. The manufacturer has to make the soda using rented equipment, package the soda in boxes using rented machines, and load the soda onto rented trucks using rented forklifts. The company also leases computers for all its employees. The point is, at any given time, any given company could have thousands of leased assets on their books, and every single one has to be accounted for under the new lease accounting rules. This will impact the stores you shop in, the restaurants you eat at, and more than likely the company you work for.
Once again, the total market impact is estimated to be $2 trillion. Our clients include Fresh to Order, PT Solutions and Floor & Décor.
What’s your current revenue model?
We provide software as a service and require a minimum one-year contract. Several clients pay up front for multiple years. We also have a strong support to ensure our clients deploy our software correctly and receive the most value. In the month of May, we closed over $250K in sales by mid-month.
Who are your competitors and how do you stand out?
We stand out because we are the only company that started as accounting software and was built by accountants. The rest started as real estate management systems. We are asset agnostic, so we handle both real estate and equipment. Most of our competitors do one or the other.