The implementation of ASC 842 and IFRS 16 lease accounting standards has forced organizations to rethink their lease management strategies. Many companies now face a critical decision: should they establish an internal leasing Center of Excellence (CoE) or outsource these functions? Let’s examine what makes an effective leasing CoE and how to determine the right approach for your organization.

Understanding the Leasing Center of Excellence

A leasing CoE is a specialized team that centralizes expertise in lease accounting and management. Unlike traditional finance teams, a CoE focuses on ensuring data accuracy, compliance, and operational efficiency across all leasing activities.

Key responsibilities include:

• Managing lease data integrity and documentation

• Ensuring compliance with accounting standards

• Overseeing lease sub-ledger maintenance

• Coordinating with other departments (finance, procurement, legal)

Composition of a Leasing CoE

Most large enterprises structure their leasing CoE with:

• 2-5 specialized professionals (typically mid-to-senior level)

• CPA expertise (for accounting compliance)

• Cross-functional collaboration (without absorbing all leasing-related tasks)

Unlike accounts payable teams that handle routine transactions, a leasing CoE requires deeper technical knowledge—similar to a fixed asset accounting team.

Centralized vs. Decentralized Models

Organizations typically adopt one of three models:

1. Centralized (50-75% of cases) – A single team manages most lease processes

2. Decentralized (~25%) – Business units handle leasing with CoE support

3. Hybrid (~25%) – Shared responsibilities between CoE and other departments

The right structure depends on company size, lease complexity, and operational needs. For global enterprises, centralized CoEs often work best—provided they offer 24/7 support across time zones.

Structuring for Success with RACI

A well-defined RACI matrix (Responsible, Accountable, Consulted, Informed) is crucial for clarifying roles in lease management. Since leasing involves multiple stakeholders—finance, tax, real estate, IT—continuous updates to the RACI framework are necessary to reflect process changes.

Outsourcing vs. In-House: Key Considerations

While outsourcing lease management is an option, most large enterprises keep their CoE internal due to:

1. Adaptability Challenges – Outsourced teams may struggle with evolving business needs

2. Communication Gaps – Frequent coordination with internal teams is harder externally

3. System Integration Issues – Third-party tools often lack seamless ERP connectivity

4. Relationship Management – High turnover in outsourced teams disrupts continuity

When Outsourcing Makes Sense

Outsourcing may be viable for:

• Smaller lease portfolios

• Non-core leasing activities

• Companies with limited in-house expertise

However, for strategic, high-value, or complex leasing operations, an internal CoE typically delivers better long-term results.

Final Recommendation

Before deciding on outsourcing, assess:

• Lease volume and complexity

• Integration needs with other systems

• Internal team capabilities

• Long-term strategic importance

For most large organizations, a well-structured internal CoE—supported by strong processes and technology—proves more effective than outsourcing. The key is balancing centralized oversight with flexible collaboration across business units.

Looking to optimize your lease management? Start by evaluating your current processes, then build (or refine) a CoE that aligns with your company’s unique needs.