In the last 5 years, SAP has advanced considerably its solution for Contract & Lease Management (SAP CLM), a solution that is part of the SAP RE-FX Flexible Real Estate Management, and has been re-branded to better describe the potential it has, not only to comply with IFRS 16 and US GAAP-ASC 842, but to actually manage the leases any company has.

The purpose of this document is to review and describe the characteristics of the S/4HANA Cloud for Contract & Lease Management.

Contract types

1. Lease contracts describe contractual agreements between two partners: the Lessor and the Lessee. 

2. The lessor is the owner of an asset, the lessee has a right of use asset during the period of time agreed in the lease contract. 

3. For the use of the asset, the lessee must pay lease payments, which are agreed in the lease contract.

Contract types: Lease-In / Lease-out, Sublease , Service Contract. 

Contract objects: Real Estate, Machinery, Equipment, Vehicles, Computer hardware, etc 

• S/4HANA Cloud for Contract & Lease Management helps customers standardize their Lease-in, Lease-out, Sublease and Service contract management activities 

• Main Features: Multi currency, Contract Migration, CPI adjustments, Statistical valuation rule, US GAAP as parallel ledger, Valuation Balance report (Lease cockpit) that offers customers a multi-parameter view on lease balances (Liability periods, Right of use periods, Interest sums, Depreciation sums), Output Management, General letter as part of the Output management, Extensibility of fields in the contract, Lease questionnaire. 

• Covering real estate, as well as machinery, equipment, vehicles and computer hardware. 

• Additional contract attributes can be defined by customer via SSCUI

What's New

• General letter as part of the Output management that allows to send letter with free text field to customers or vendors. 

• Extensibility of certain fields in the contract that enables customers to substitute or insert some prefixes or fill out some fields in the contract name auto-fill, for example the customer can use the contract type and contract object name as prefix.

• Lease questionnaire is a questionnaire for leasing scenarios that helps simplify lease classifications.

• Two new chats as part of the Valuation cockpit that offer an overview of the status of the valuation.

• CDS views for contract master data and one for the contract object types that enable the customers to make their own customized reports. 

Integrated Scenario 

Contract Management:

• 5 different lease types for lease in, lease out and service contract 

• Leasing partners 

• Top 11 predefined types of contract items 

• Terms and conditions for notice and renewal options (validity) 

• Lease payment cash flow with full integration 

• Critical dates and reminders 

• Document management 

Multi-GAAP Posting:

• Multi-GAAP enabling (IFRS, US GAAP, HGB) 

• Manage right-of-use assets and liabilities 

• Customer / Vender accounting 

• Post depreciation and repayments 

• Lease payments 

• Controlling / Profit center accounting 

Valuation and Classification:

• Classification and evaluation rules 

• Statistical valuation rule 

• Calculate and report on net present value, depreciation, repayment and interest rate 

• Change management / Re-valuation 

• Support transition scenarios 

• Create / Link to fixed assets (SSCUI) 

Financial Accounting integration

S/4HANA Cloud for Contract & Lease Management: 

• is a deeply integrated sub-component of SAP S/4HANA Cloud finance (Profit Center, Cost Centers, Assets, Functional areas etc.) 

• is simplifying your solution landscape by: 

— Real-time valuation of leases

— Elimination of financial interfaces

— Reducing the number of applications in system landscape

Coordination between the Lease Administrator and Asset Account is critical for proper classification and valuation. Sharing a common platform eliminates operational silos between these critical players.

Contract & Lease Management App 

Improved contract performance with real-time lease reporting and analytics 

Easy navigation:

• User-friendly interface, easy-to-navigate key lease dates 

• Calendar view highlighting, period, renewals, notice dates, and options 

• Contract simulations for renewals and break options 

• Cost per location

Simplified lease administration

• Tracking of conditions to evaluate lease performance 

• Quick access to contract, abstract, or other attachments 

• Integration of basic lease data into location management to support lease/space strategy initiatives

Contract & Lease Management Enterprise Search 

Ability to find contracts from the search bar 

Functionality:

• "Search" functionality providing: unified, comprehensive, and secure real-time access to contract data.

Improvement:

• Search functionality that returns structured data (contracts) 

• Various possibilities to search for a contract (such as, using part of the contract name, the address, or a reminder)

Contract & Lease Management Dashboard 

Analytical insights for contract and lease management 

Functionality:

• Reporting capabilities for lease contracts with a focus on: Contract type, Contract types in company code and Contract object types.

• Delivering predefined stories for SAP Analytics Cloud 

Improvement:

• By gaining visibility of the leasing portfolio 

• Through monitoring a contract by company code 

• By monitoring a contract by contract object 

• Through offering a flexible dashboard for contract reporting

We at DYCSI have deep knowledge of the SAP Contract & Lease Management module and have implemented it in multiple companies. Please reach out to Joe Torres for a free demo.