With new leasing regulations coming on board as soon as 2019, both owners and lessors of commercial office space need to start thinking outside the box if they don’t want to be holding the bag when the ball drops.
Currently, your company’s leases – whether they be property, vehicles, or other high-value equipment – do not have to be listed as an asset on the balance sheet. With the implementation of IFRS 16, due to comes into play in 2019, all that changes.
What does this mean for my company?
IFRS 16 has the potential to increase your company’s liability in several ways, as you will suddenly see a significant jump in total assets as a result of having to recognize a right-of-use asset and a lease liability. For a new company that is trying to stay lean, this could present problems.
Having fixed office space can exacerbate this issue. What, then, is the solution?
Should I buy my office space?
If you can afford to buy your space and turn it into a permanent asset, perhaps that is an option for you. However, there are probably just as many reasons not to buy. The added expense of upkeep and the depletion of your working capital, combined with a sudden inflexibility of a fixed location might not be the best decision for you.
Consider flexible office space as a viable option. It’s cost-effective, it’s agile, and it won’t tip your balance sheet in the wrong direction.
Do I really need fixed office space at all?
With the millennial trend toward remote working, many offices remain empty for the better part of the week. If you’re not using it, the money you are investing in square footage is being wasted on an unnecessary expense. By eliminating the workstations and offices you are not using, it solves several problems: it helps you reduce your dependence on fixed office space, reduces your monthly spend, and protects you from potential liability issues from IFRS 16.
Flexible office space solves the problems that fixed office space represents. It reduces monthly expenditures and supports workforce agility and productivity. Plus, your flexible office space agreements are, well, flexible.
The Benefits of Flexible Office Spaces
By implementing a short-term philosophy, it opens you up to other options as well as keeping your physical office space off the balance sheet.
Take a good look at how and where your workforce is spending their time, and consider what a flexible office space could do for you.
In general, companies are seeing a marked increase in flexible office space. It provides them with the ability to scale along with their company’s needs and gives them on-demand access to the services they want when they need them most.
Workspace Strategies: flexibility when you need it most
If you’ve been considering shifting to a more flexible office environment, there is no time like the present. With IFRS 16 looming, being ahead of the curve is never a bad idea. If you would like to learn more about how flexible office space can benefit businesses, contact us today.
