Payment timing
Whether lease payments are made at the start (in advance) or end (in arrears) of each payment period.
Definition
Payments in advance (at the start of each period) produce a different pattern from payments in arrears (at the end). An advance payment is effectively received immediately and carries zero discounting for that first payment. Payments in arrears are discounted for their full period.
Why it matters
Payment timing affects the initial present value calculation. Payments in advance produce a slightly lower initial lease liability than payments in arrears for the same annual amount, because the first payment is not discounted.
In AuditLease
AuditLease captures payment timing (in advance or in arrears) for each lease and applies it correctly in the present value calculation.
Related terms
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence — so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.