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Managed Service Agreements in the context of IFRS16

 

As you are probably aware, IFRS16 has introduced significant changes to the way leases are accounted for in financial statements. As a result, many businesses are now looking for alternative ways to access assets without having to recognise them as leased assets on their balance sheet.

One solution that is becoming increasingly popular is the use of Managed Service Agreements (MSAs). MSAs are structured as service contracts rather than leases, and provide businesses with access to assets on a pay-per-use basis. This means that businesses can access the assets they need without having to recognise them as leased assets on their balance sheet under IFRS16.

The benefits of a Managed Service Agreement include:

  1. Reduced capital expenditure: By accessing assets on a pay-per-use basis, businesses can reduce their upfront capital expenditure, and avoid the complexities associated with lease accounting under IFRS16.
  2. Greater flexibility: MSAs offer businesses greater flexibility, allowing them to adjust their agreements over time to reflect changes in business needs. This can be particularly beneficial for businesses with fluctuating demand for assets.
  3. Access to the latest technology and equipment: MSAs can provide businesses with access to the latest technology and equipment, without the need for upfront capital expenditure. This can be particularly advantageous for businesses that require access to expensive or specialized assets.
  4. Simplified asset management: By using MSAs, businesses can simplify their asset management, with the service provider responsible for maintenance, repairs, and replacement of assets as required.

At ECS Group, we offer a range of Managed Service Agreements that are IFRS16 compliant, providing businesses with a flexible and cost-effective way to access the assets they need, without the need for upfront capital expenditure or complex lease accounting.

Our MSAs cover a wide range of assets, including IT equipment, office equipment, vehicles, and more. We work closely with our clients to understand their specific needs and provide customized solutions that meet their requirements.

To learn more about our Managed Service Agreements and how they can help your business overcome the accounting issues created by IFRS16, please contact us today. Our team of experts are on hand to provide you with all the information and support you need to make an informed decision about your asset management strategy

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