In aircraft leasing, transactions span continents and involve diverse financial ecosystems with bespoke regulatory requirements. For lessors, the ability to manage multiple currencies in their asset management system is not merely a convenience—it’s a fundamental necessity, enabling seamless operations, enhanced financial clarity, and stronger client relationships in a global market.
Flexibility to issue rental invoices and receive payments in various currencies
Lessors require the ability to issue invoices and receive payments in various currencies, such as US dollars, Euros, British Pounds (GBP), or Renminbi. This straightforward capability ensures that lessors can cater directly to the preferred operational currencies of their airline clients, streamlining payment processes.
Beyond single-currency transactions, a more complex yet vital use case involves splitting a single rental obligation across two or more different currencies. For example, a monthly rental of $1 million might be split, with $200,000 to be invoiced and settled in British Pounds, and the remaining $800,000 in US dollars. This capability necessitates creating separate rent schedules for each currency and the ability to receive payments into different bank accounts corresponding to each currency.
A critical functionality is the need to override the default bank account at the rent schedule level, rather than on every individual invoice, to ensure configuration efficiency and accuracy for various currencies.
Multi-currency functionality dramatically impacts financial reporting and accounting
Lessors need to generate receivables reports across their entire portfolio in a base currency, typically US dollars, regardless of the original transaction currency. This demands flexible currency conversion rates, whether specified periodically, loaded daily based on exchange rates, or fixed for the entire lease term.
While a system should maintain a US dollar equivalent for every transaction, the exact handling of General Ledger (GL) transactions—whether they flow through in foreign currency or are converted to US dollars—and the subsequent accounting for foreign currency gains and losses are critical considerations. The expectation is that integrated accounting systems should ideally manage these complexities, simplifying the process for the core leasing platform.
Handling payments in various currencies introduces another layer of complexity
Lessors face scenarios where an invoice is issued in a foreign currency (e.g., British Pounds), but the cash might be collected in US dollars, or conversely, both invoicing and collection occur in the same foreign currency. This requires the asset management system to accurately track payments while capturing FX gains and losses, apply them against invoices, and account for any variances due to exchange rate fluctuations between the invoice date and payment date.
Robust and globally aware asset management system
Strategically, multi-currency support serves as an “entrance ticket” in customer engagements, as many potential clients inquire about this capability early on. While current multi-currency lease volumes for some lessors might be low, any asset management software that handles this functionality signals a robust and globally aware system.
The foundational infrastructure, including currency rate tables and invoice-level conversion logic, is also important to have in place, paving the way for further development of this indispensable feature. Implementing this feature ensures that aircraft lessors remain competitive and adaptable in a dynamic international market.
Aeris ASSET
Lessors trust us to provide a highly secure and scalable cloud-based solution to streamline communication across asset management, marketing, trading and finance. With Aeris ASSET, lessors can streamline cash collection and preserve asset values by digitizing contract, finance and technical management of aircraft. With advanced analytics, lessors spend less time chasing information and more time making decisions.
