1.
The New Lease Accounting Standard – Are you
Ready for the Deadline?

2.
Adam Lewenberg - Background and Experience
• President of Postal Advocate Inc.
– The only mail audit and recovery firm in the US and Canada
– Manage a portfolio of just under 100,000 pieces of mailing equipment for
the largest US companies.
– Speak and teach nationally on mail savings and industry trends.
• Former Industry Co Chair- Boston Postal Customer Council/Mail Systems
Management Association member. CMDSS and MDC Certifications.
• Featured Writer for Mailing Systems Technology Magazine.
• Worked for one of the largest mailing vendors for over 18 years
– Director of national sales for presort, tabletop inserters, addressing
hardware/software and green offerings.
– Was one of the top 5 account managers nationally working with some of
the nations top accounts.
• Not affiliated with any mailing vendor - Unbiased advice.
March 14, 2018 2

3.
What We Are Covering:
• When is the effective date?
• What are the changes?
• What do you need to comply?
• Why is this important?
• What information do you need to provide?
• How do you get visibility?
• Best Practices
• How we can help
March 14, 2018 3

4.
Overview of Changes
There are two core types of leases for mailing equipment:
1) Finance Leases – Leases with fixed buyout amounts or where the asset is assumed
to be acquired at the end of the term. This had been recognized on the balance sheet in
the past and will continue.
2) Operating Leases – Leases without having a buyout clearly defined and with the
potential for a future useful life of the asset after the termination of the lease. Most
mailing equipment leases fit this category. In the past, only the expense of the lease
payment was listed on the Income Statement. With the new standards, the future value
of all lease payments needs to be put onto the Balance Sheet as a liability.
The Financial Accounting Standards Board (FASB) has established new lease rules (ASC 842) that
require companies to record operating leases on the balance sheet as a liability vs. only declaring the
expense on the income statement.
– Must include the full future discounted value of the remaining lease obligations.
– Public companies – Starts 12/15/18
– Non Public companies – Starts 12/15/19
– Will require that you have full visibility to all leases
– They apply to any agreement over 12 months in term and specific longer-term rentals may need to be
considered.
March 14, 2018 4

5.
Example:
Mailing Equipment Lease at $200 per month with a 48-month term. 36 months are remaining.
• Income Statement - $200 per month X 12 months - $2400 of annual expense
• (New) Balance Sheet – 36 months remaining @ $200 per month - $7200 as a liability (This
can be reduced based on the company’s discount rate.)
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Annual Income Statement (values in 000's) Balance Sheet (values in 000's)
Period Ending: 12/31/2017 Period Ending: 12/31/2017
Total Revenue $3,549,948 Current Assets
Cost of Revenue $1,722,669 Total Current Assets $2,636,508
Gross Profit $1,827,279 Long-Term Assets $3,982,298
Operating Expenses Deferred Asset Charges $59,909
Research and Development $129,767 Total Assets $6,678,715
Sales, General and Admin. $1,237,739 Current Liabilities
Non-Recurring Items $59,431 Total Current Liabilities $2,054,993
Operating Income $400,342 Long Term Liabilities $4,435,161
Add'l income/expense items ($3,856) Total Liabilities $6,490,154
Earnings Before Interest and Tax $396,486 Stock Holders Equity
Interest Expense $113,497 Total Equity $188,561
Earnings Before Tax $282,989 Total Liabilities & Equity $6,678,715
Income Tax $21,649
Net Income $261,340
INCOME STATEMENT BALANCE SHEET

6.
What do you need to do?
1. DON’T DELAY
2. Engage key stakeholders – Procurement/AP/Real
Estate/Legal/Finance
3. Take Inventory - Get a handle of your lease portfolio
4. Look at procuring a spend management system
5. Plan for the Future
Do not underestimate the amount of work required
…Almost one-fourth (23%) of companies surveyed in May 2017 by PwC and commercial real estate services firm
CBRE said they hadn't started their lease accounting adoption efforts yet. And a Deloitte survey showed that 31.4% of
more than 2,150 executives polled in May 2017 said their organizations were unprepared to comply with the
new standard. - Tysiac, Ken. Lease accounting laggards face serious risks. Journal of Accountancy. Web. Jan 1, 2018.
March 14, 2018 6

7.
Why is this important?
1. Organizations will need increased oversight on their current and
future leases to make sure the liabilities they have/or are entering
make the most sense for their organization’s financial picture that
will be shown on the balance sheet.
2. You will need to have a much higher level of visibility than you’ve
had in the past which will require new processes to develop and
maintain.
March 14, 2018 7

8.
Challenges with Getting Visibility
It continues to be very difficult to get full visibility to the mailing
category because of the following:
1. Mailing vendors do not offer consistent reporting
2. Even if you have copies of lease agreements, the date a lease was
signed is typically different from the lease commencement date
3. End of lease dates are not shown on any invoices
4. Decentralized purchasing processes where the locations, divisions
or regions act independently on their mailing agreements
5. Keeping track of mergers, acquisitions or divestitures
March 14, 2018 8

9.
Challenges with Getting Visibility (Cont’d)
6. There may be multiple vendors used throughout the locations
increasing the difficulty of full visibility.
7. Questionable mailing equipment vendor lease renewal practices that
extend obligations such as the following:
– Trying to get locations to renew early without properly disclosing the end of lease
terms.
– Offering special incentives to renew early by clicking on an email, offering gift
cards to renew or to renew by paying an invoice at a discounted rate without
properly disclosing end of lease dates.
– Reaching out to location level contacts (vs. headquarter decision makers) and
getting them to renew leases when they may not be properly authorized to do so.
– Automatic evergreen extensions if new agreements are not put in place 30-90
days prior to the end of term.
March 14, 2018 9

10.
What information do you need to provide?
Any agreement greater than 12 months needs to be identified, tracked
and reported on. You will need to know the following details for all your
leases:
• Lease Number
• Location Address
• Term/Lease Period
• Monthly Amount
• Commencement Date
• End of Lease Date
• Items Included in the Agreement – Including model and serial
numbers and equipment descriptions.
We are finding many of our clients are investing in spend management systems
to help them manage and maintain this data. They are coming to us to provide
the information above, so they can keep these systems maintained.
March 14, 2018 10

11.
How do you get visibility?
1. Reach out to vendors – See what reports are available
2. Go to Accounts Payable – Get exports of paid invoices
3. Set up log-ins on the mailing vendor’s website
4. Reach out to vendors to validate end of lease dates
5. Keep this information updated with contract changes
March 14, 2018 11

12.
Best Practices
1. Have leases reviewed centrally vs. being approved throughout your
locations. This assures visibility and oversight.
2. Ask about rental and purchase options before committing to a
lease.
3. Work with your finance department to make sure leases comply
with company standards.
4. Review the terms and conditions of your agreements to understand
end of lease options and financing fees.
5. Set up a process to manage the portfolio to make sure you are
capturing the most up to date information.
March 14, 2018 12

13.
Additional Visibility Benefits
• 30-70% equipment savings
• Eliminate vendor fees and overcharges
• Claim postage from returned meters and closed
accounts.
• Simpler future management of portfolio.
March 14, 2018 13

14.
Helping multi-location
organizations streamline
their mailing costs
Over 98,000 pieces of
equipment, managed
by Postal Advocate
Recovered over
$10,223,475
in lost postage, vendor
overcharges and fees
ENTERPRISE-WIDEMAILAUDITANDRECOVERY
OVER $38,000,000 IN CLIENT SAVINGS
$964K
60%
Average Client
Savings
Average Equipment
Savings
HOW WE DO IT
• 235+ years of industry experience
• Comprehensive web-based tool
providing visibility of all mail
and equipment spend
• Time Savings - Assistance
in fleet management
visit www.postaladvocate.com or call (888)977-MAIL(6245)

15.
Sign Limited Agency
Agreement/Kick-Off Call.
Provide copies of vendor
invoices, AP export,
location list,
equipment inventory list.
Present savings opportunities
and get client approval.
Postal Advocate provides
ongoing support,
manages renewals, billing
and vendor compliance.
Provide enterprise visibility of
all spend, costs and
documented savings
through enterpriseAdvocate.
Provide client log-in.
1 2
3
4 5 6
HOW IT
WORKS
Work with current vendor to build population
report, contract terms/start/end dates,
postage volumes, costs.
Analyze spend, check for contract
compliance, billing errors, vendor
fees/overcharges, lost postage.
Identify savings opportunities.
Submit vendor credit requests,
lost postage forms and
eliminate avoidable fees.
Negotiate pricing. Create catalog.
Work with locations -
asset validation, rightsize, termination…
Full implementation of savings.
visit www.postaladvocate.com or call (888)977-MAIL(6245)
Conduct Analysis
NO COST – AUDIT PHASE CONTRACTED CLIENT

16.
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How we can help

17.
enterpriseAdvocate™– Multi Location System -
Dashboard
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The data above is for demonstrative purposes only. Data does not represent true spends and costs.

18.
enterpriseAdvocate™ – Multi Location System - Dashboard
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Highlights
• Simple access to all mail spends.
• Visibility to fees and savings.
• All account numbers are stored in one place.
• Simple to drill down to an individual location or invoice.
The data above is for demonstrative purposes only. Data does not represent true spends and costs.

19.
Summary
• Effective Date – December 15, 2018 (Public companies)
• Get Started and take inventory
• Put together a team of key stakeholders to work through
the process
• Get visibility of all your leases
• Create a process for the future
• Get help from the experts
March 14, 2018 19

20.
Contact info: (20pt)
March 14, 2018 20
Questions?
Contact: Adam Lewenberg - President
888-977-MAIL X 501
adam.lewenberg@postaladvocate.com

21.
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