{"id":999980060,"date":"2026-02-10T10:34:38","date_gmt":"2026-02-10T03:34:38","guid":{"rendered":"https:\/\/bizzi.vn\/?p=999980060"},"modified":"2026-06-09T13:42:45","modified_gmt":"2026-06-09T06:42:45","slug":"what-is-ifrs-16-how-does-ifrs-16-affect-businesses","status":"publish","type":"post","link":"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/","title":{"rendered":"What is IFRS 16? How does IFRS 16 affect business costs?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">IFRS 16 does not automatically increase \u201clease payables,\u201d but it changes how businesses recognize lease expenses on their financial statements: from <\/span><b>rent expense<\/b><span style=\"font-weight: 400;\"> luxurious <\/span><b>Depreciation + Interest<\/b><span style=\"font-weight: 400;\">This change directly impacts <\/span><b>EBITDA<\/b><span style=\"font-weight: 400;\">, debt ratio, cash flow classification, and the resulting consequences. <\/span><b>Compliance costs \u2013 system costs \u2013 data operation costs<\/b><span style=\"font-weight: 400;\"> during implementation.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This article explains the nature <\/span><b>What is IFRS 16?<\/b><span style=\"font-weight: 400;\">, answer clearly <\/span><b>Does IFRS 16 increase or decrease rental costs?<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Does applying IFRS 16 increase costs?<\/b><span style=\"font-weight: 400;\">, from the CFO&#039;s perspective.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_la_gi_va_IFRS_16_thay_doi_ban_chat_%E2%80%9Cchi_phi_thue%E2%80%9D_nhu_the_nao_tren_bao_cao_tai_chinh\" >What is IFRS 16 and how does IFRS 16 change the nature of \u201crent expenses\u201d on financial statements?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Cong_thuc_cot_loi_trong_IFRS_16_CFO_can_hieu_de_doc_dung_chi_phi\" >The core formula in IFRS 16: What CFOs need to understand to correctly interpret costs.<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#1_Xac_dinh_No_thue_ban_dau_Lease_Liability\" >1. Determine the initial lease liability (Lease Liability)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_ap_dung_cho_hop_dong_nao_va_ngoai_le_nao_giup_doanh_nghiep_giam_chi_phi_tuan_thu\" >Which contracts are covered by IFRS 16, and what exceptions help businesses reduce compliance costs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_lam_chi_phi_thue_tang_hay_giam_Cau_tra_loi_dung_%E2%80%9Cchi_phi_ke_toan_bi_front-loading_con_dong_tien_thue_khong_tu_tang%E2%80%9D\" >Does IFRS 16 increase or decrease rental costs? The correct answer: &quot;Accounting costs are front-loaded, but rental cash flow does not increase on its own.&quot;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_anh_huong_den_chi_phi_doanh_nghiep_nhu_the_nao_qua_EBITDA_EBIT_loi_nhuan_rong_va_he_so_no\" >How does IFRS 16 affect business costs through EBITDA, EBIT, net profit, and debt ratio?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_tac_dong_gi_den_chi_phi_van_hanh_tang_workload_du_lieu_kiem_soat_thay_doi_hop_dong_va_doi_soat_lich_thanh_toan\" >What impact does IFRS 16 have on operating costs: increased data workload, contract change control, and payment schedule reconciliation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Ap_dung_IFRS_16_co_lam_tang_chi_phi_khong_phan_biet_%E2%80%9Cchi_phi_ke_toan%E2%80%9D_va_%E2%80%9Cchi_phi_trien_khaituan_thu%E2%80%9D\" >Does adopting IFRS 16 increase costs? Distinguishing between \u201caccounting costs\u201d and \u201cimplementation\/compliance costs\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_co_the_lam_tang_chi_phi_von_nhu_the_nao_qua_Covenants_vi_sao_CFO_can_ke_hoach_dam_phan_ngan_hang\" >How IFRS 16 can increase the cost of capital through Covenants: why do CFOs need a bank negotiation plan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_tac_dong_thue_va_rui_ro_truy_thu_thue_ra_sao_khi_%E2%80%9Cchi_phi_ke_toan%E2%80%9D_lech_voi_hoa_don_tien_thue_thuc_te\" >How does IFRS 16 impact taxes and the risk of tax recovery when &quot;accounting expenses&quot; differ from actual rental invoices?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Bang_checklist_chi_phi_trien_khai_IFRS_16_Doanh_nghiep_chiu_them_chi_phi_gi\" >IFRS 16 Implementation Cost Checklist: What additional costs will businesses incur?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_buoc_chien_luoc_%E2%80%9CThue_hay_Mua%E2%80%9D_Lease_vs_Buy_thay_doi_nhu_the_nao_khi_loi_the_%E2%80%9Cngoai_bang_can_doi%E2%80%9D_bien_mat\" >How does IFRS 16 force a change in the \u201cLease vs. Buy\u201d strategy when off-balance-sheet advantages disappear?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Dong_nhat_bao_cao_tap_doan_khi_cong_ty_me_ap_dung_IFRS_16_con_cong_ty_con_dung_VAS_06_chi_phi_phat_sinh_o_dau_va_kiem_soat_the_nao\" >Consolidating corporate reporting when the parent company applies IFRS 16 and the subsidiary uses VAS 06: where are the expenses incurred and how are they controlled?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Bang_Before_vs_After_IFRS_16_Chi_phi_thue_va_KPI_thay_doi_nhu_the_nao\" >Before vs. After IFRS 16 Table: How have rental costs and KPIs changed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Cau_hoi_thuong_gap_FAQ_ve_IFRS_16_va_chi_phi_cho_CFOKe_toan\" >Frequently Asked Questions (FAQ) about IFRS 16 and the cost for CFO\/Accountant<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_co_lam_tang_tien_thue_phai_tra_khong\" >Does IFRS 16 increase rent payable?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Vi_sao_ap_dung_IFRS_16_lam_EBITDA_tang\" >Why does applying IFRS 16 increase EBITDA?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#%E2%80%9CFront-loading%E2%80%9D_trong_IFRS_16_nghia_la_gi_va_anh_huong_chi_phi_ra_sao\" >What does &quot;front-loading&quot; mean in IFRS 16 and how does it affect costs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Lai_suat_bien_di_vay_IBR_lay_tu_dau_de_tinh_IFRS_16\" >Where does the borrowing interest margin (IBR) for calculating IFRS 16 come from?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Hop_dong_dich_vu_co_the_chua_%E2%80%9Cembedded_lease%E2%80%9D_khong\" >Can a service contract contain an \u201cembedded lease\u201d?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_anh_huong_gi_den_bao_cao_luu_chuyen_tien_te\" >How does IFRS 16 affect the cash flow statement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#IFRS_16_co_lam_tang_rui_ro_vi_pham_covenant_khong\" >Does IFRS 16 increase the risk of covenant violations?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Doanh_nghiep_chiu_them_chi_phi_gi_khi_ap_dung_IFRS_16\" >What additional costs do businesses incur when implementing IFRS 16?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Bizzi_ho_tro_gi_cho_doanh_nghiep_khi_ap_dung_IFRS_16\" >What support does Bizzi provide to businesses when implementing IFRS 16?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/bizzi.vn\/en\/what-is-ifrs-16-how-does-ifrs-16-affect-businesses\/#Ket_bai\" >Conclusion\u00a0<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_la_gi_va_IFRS_16_thay_doi_ban_chat_%E2%80%9Cchi_phi_thue%E2%80%9D_nhu_the_nao_tren_bao_cao_tai_chinh\"><\/span><b>What is IFRS 16 and how does IFRS 16 change the nature of \u201crent expenses\u201d on financial statements?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>IFRS 16<\/b><span style=\"font-weight: 400;\"> This is a standard lease requirement that the lessee must acknowledge. <\/span><b>Right-of-Use Asset (ROU Asset)<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Lease Liability<\/b><span style=\"font-weight: 400;\"> for the majority of lease agreements. This makes &quot;rent cost&quot; no longer a separate expense. <\/span><b>rent expense<\/b><span style=\"font-weight: 400;\"> Linear as before, but transformed into <\/span><b>ROU Asset depreciation<\/b><span style=\"font-weight: 400;\"> and <\/span><b>interest<\/b><span style=\"font-weight: 400;\"> on Lease Liability.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Prior to IFRS 16, many operating leases were only recognized. <\/span><b>off the balance sheet<\/b><span style=\"font-weight: 400;\">, with rental costs being accounted for directly as operating expenses.<\/span><i><span style=\"font-weight: 400;\">rent expense<\/span><\/i><span style=\"font-weight: 400;\">IFRS 16 eliminates this approach and replaces it with <\/span><b>a single lessee accounting model<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In essence, IFRS 16 does not create new costs, but <\/span><b>Change the cost structure from rent expense to depreciation and interest expense.<\/b><span style=\"font-weight: 400;\">This leads to changes in KPIs, financial structure, and covenant risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, CFOs cannot interpret IFRS 16 as a mere accounting change, but must view it as a whole. <\/span><b>Shifts in how unit performance is measured, budget allocation is made, and financial leverage is assessed.<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-999980068 size-full aligncenter\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ifrs-16-la-gi-va-tai-sao-quan-trong-e1753181684997.jpg\" alt=\"what-ifrs-16-is-it-and-why-is-it-important-e1753181684997\" width=\"1000\" height=\"725\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ifrs-16-la-gi-va-tai-sao-quan-trong-e1753181684997.jpg 1000w, https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ifrs-16-la-gi-va-tai-sao-quan-trong-e1753181684997-300x218.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ifrs-16-la-gi-va-tai-sao-quan-trong-e1753181684997-768x557.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ifrs-16-la-gi-va-tai-sao-quan-trong-e1753181684997-18x12.jpg 18w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">The core change is the &quot;on-balance sheet&quot; mechanism: previous lease agreements that might not have been fully reflected on the balance sheet (depending on classification) will now increase. <\/span><b>total assets<\/b><span style=\"font-weight: 400;\"> and <\/span><b>total debt<\/b><span style=\"font-weight: 400;\">On the P&amp;L, instead of a single lump-sum lease payment, the business records:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Depreciation<\/b><span style=\"font-weight: 400;\"> (usually linear with lease term)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Interest<\/b><span style=\"font-weight: 400;\"> (decreases gradually over time as lease debt decreases)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Quantitatively, IFRS 16 begins with determining the present value of a lease obligation:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lease Liability (original)<\/b><span style=\"font-weight: 400;\"> = <\/span><b>PV<\/b><span style=\"font-weight: 400;\"> (present value) of future lease payments, discounted according to <\/span><b>Discount Rate\/IBR<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>ROU Asset (original)<\/b><span style=\"font-weight: 400;\"> It is usually determined based on the initial lease availability and adjusted for additional costs such as initial direct costs, dismantling\/restoration costs, and lease incentives (if any).<\/span><\/li>\n<\/ul>\n<p><b>Why do CFOs need to read this section carefully?<\/b><span style=\"font-weight: 400;\"> Because &quot;rental costs&quot; don&#039;t increase in cash, but &quot;transform&quot; in the reporting and increase recognized debt, this leads to changes in KPIs, budget limits, unit performance evaluation methods, and covenant risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In practical implementation, the problem often lies not in the PV formula, but in the scattered contract and lease documentation data: inconsistent payment periods, outdated terms and conditions, and invoices that don&#039;t match the contract. When a business has a standardized layer of lease documentation (invoices\/receipts\/payment terms) by supplier \u2013 payment period \u2013 cost center, the process of creating input data for IFRS 16 becomes &quot;lighter&quot; and reduces errors. At this stage, Bizzi can support the centralization and standardization of lease expense documents so that CFOs and the finance team have sufficiently clean operational data before inputting it into the IFRS 16 engine.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Cong_thuc_cot_loi_trong_IFRS_16_CFO_can_hieu_de_doc_dung_chi_phi\"><\/span><b>The core formula in IFRS 16: What CFOs need to understand to correctly interpret costs.<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Xac_dinh_No_thue_ban_dau_Lease_Liability\"><\/span><b>1. Determine the initial lease liability (Lease Liability)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The initial lease liability is recorded as <\/span><b>Present Value<\/b><span style=\"font-weight: 400;\"> of future lease payments:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Lease Liability\u2080 = Payment\u2081 \/ (1 + r)\u00b9 + Payment\u2082 \/ (1 + r)\u00b2 + \u2026 + Payment\u2099 \/ (1 + r)\u207f<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In there:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lease Payment: Lease payment at the current payment period.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">rrr: <\/span><b>drug rate<\/b><span style=\"font-weight: 400;\"> (usually IBR \u2013 Incremental Borrowing Rate)<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">nnn: lease term<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\ud83d\udc49 Here&#039;s the first point where IFRS 16 can make costs appear higher: <\/span><b>The higher the IBR \u2192 the larger the initial lease debt \u2192 the higher the interest expense at the beginning of the period.<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><img decoding=\"async\" class=\"wp-image-999980061 size-full aligncenter\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ey-ifrs16-impact-graphic.png\" alt=\"\" width=\"477\" height=\"286\" title=\"\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ey-ifrs16-impact-graphic.png 477w, https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ey-ifrs16-impact-graphic-300x180.png 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2026\/02\/ey-ifrs16-impact-graphic-18x12.png 18w\" sizes=\"(max-width: 477px) 100vw, 477px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_ap_dung_cho_hop_dong_nao_va_ngoai_le_nao_giup_doanh_nghiep_giam_chi_phi_tuan_thu\"><\/span><b>Which contracts are covered by IFRS 16, and what exceptions help businesses reduce compliance costs?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">IFRS 16 applies when the contract grants the lessee the right to... <\/span><b>control usage<\/b><span style=\"font-weight: 400;\"> one <\/span><b>identified assets<\/b><span style=\"font-weight: 400;\"> for a period of time in exchange for payment. Two quick identification questions:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Have &quot;<\/span><b>de asset<\/b><span style=\"font-weight: 400;\">&quot; or not?&quot;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The lessee has &quot;<\/span><b>right to control use<\/b><span style=\"font-weight: 400;\">&quot; or not (benefiting economically and deciding how\/for what to use)?&quot;<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Businesses can apply certain exceptions to reduce computational load and operating costs:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Short-term lease<\/b><span style=\"font-weight: 400;\">: Short-term rental (less than 12 months) (and no purchase option).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Low-value assets<\/b><span style=\"font-weight: 400;\">: low-value assets (standards do not set fixed thresholds; businesses establish consistent and well-founded internal policies).<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">One often overlooked risk is <\/span><b>infected ledger<\/b><span style=\"font-weight: 400;\"> (Hidden outsourcing in service contracts). CFOs need to pay special attention to this.<\/span><b>substantive substitution rights<\/b><span style=\"font-weight: 400;\">&quot;: If the supplier has a genuine right to replace the asset (with the ability and economic benefit to do so), the contract may not be a lease under IFRS 16, even though it may appear to be a lease.&quot;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When contract catalogs are scattered across departments and invoices arrive through multiple channels, embedded leases are easily overlooked or misclassified. In practice, an effective approach is to centralize data by vendor and payment pattern to narrow down the contracts requiring review.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bizzi can act as a centralized data center for vendor-based rental costing, helping finance teams identify transaction groups with signs of &quot;hidden leasing&quot; and classify them early, reducing the risk of misreporting and future compliance costs.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_lam_chi_phi_thue_tang_hay_giam_Cau_tra_loi_dung_%E2%80%9Cchi_phi_ke_toan_bi_front-loading_con_dong_tien_thue_khong_tu_tang%E2%80%9D\"><\/span><b>Does IFRS 16 increase or decrease rental costs? The correct answer: &quot;Accounting costs are front-loaded, but rental cash flow does not increase on its own.&quot;<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>Does IFRS 16 increase or decrease rental costs?<\/b><span style=\"font-weight: 400;\"> Typically, the total cost recorded on the P&amp;L (depreciation + interest) tends to... <\/span><b>Higher in the early stages and lower towards the end of the period.<\/b><span style=\"font-weight: 400;\"> (effect <\/span><b>front-loading<\/b><span style=\"font-weight: 400;\">), because interest is calculated on the lease balance and decreases over time. However, <\/span><b>actual rent paid<\/b><span style=\"font-weight: 400;\"> according to the contract <\/span><b>does not increase on its own<\/b><span style=\"font-weight: 400;\"> simply because the business applies IFRS 16.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, if a business only looks at one accounting period, it might see &quot;increased expenses&quot; and misunderstand IFRS 16 as an increase in rental costs. The correct way for a CFO to read it is to look at it from the perspective of IFRS 16. <\/span><b>contract lifecycle<\/b><span style=\"font-weight: 400;\">According to the amortization schedule:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">ROU depreciation is typically relatively stable over time.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Interest on the loan decreases over time as the lease liability is repaid.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">During implementation, payment period data and invoice values need to match the contract; if there is a discrepancy, the allocation schedule and comparison between cash and P&amp;L will be incorrect from the outset. To reduce data errors, businesses should standardize payment periods and map contracts, invoices, and cost centers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bizzi can help centralize rental invoices, attach metadata by period and related contract, enabling CFOs to reconcile &quot;actual rent paid&quot; with IFRS 16 accounting data on a monthly\/quarterly basis, avoiding disputes due to fragmented data.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_anh_huong_den_chi_phi_doanh_nghiep_nhu_the_nao_qua_EBITDA_EBIT_loi_nhuan_rong_va_he_so_no\"><\/span><b>How does IFRS 16 affect business costs through EBITDA, EBIT, net profit, and debt ratio?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>How does IFRS 16 affect business costs?<\/b><span style=\"font-weight: 400;\"> This is most often demonstrated through KPIs:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>EBITDA typically increases.<\/b><span style=\"font-weight: 400;\"> Because rent expenses decrease\/disappear from operating costs, replaced by depreciation and interest (which are below EBITDA).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>EBIT and net profit<\/b><span style=\"font-weight: 400;\"> This can fluctuate over time due to the front-loading effect, especially in the early stages of the contract.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Total assets and total liabilities increased.<\/b><span style=\"font-weight: 400;\"> due to the recognition of ROU Asset and Lease Liability (gross-up effect).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Leverage ratios and covenants<\/b><span style=\"font-weight: 400;\"> More sensitive: Debt\/Equity, Net Debt\/EBITDA, Interest coverage...<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The key area for CFOs to prepare is a &quot;bridge&quot; explaining KPI fluctuations before and after IFRS 16, as stakeholders (CEO, banks, investors) may see increased EBITDA but also increased leverage. To build a good bridge, businesses need consistent data on lease commitment by unit\/cost center, payment schedules, and contract classifications.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">From a management perspective, if rental data is linked to the cost center and budget right from the operational stage (instead of just being aggregated at the end of the period), the CFO will be more proactive in managing run-rates and assessing the impact of IFRS 16 on a unit-by-unit basis. Bizzi can support this step by standardizing rental cost data by cost center\/budget owner, creating a data base for FP&amp;A to simulate scenarios on EPM\/Excel and prepare explanatory documents for stakeholders.<\/span><\/p>\n<p><b>Three variables determine whether IFRS 16 will increase costs: Lease Term, IBR, and Lease Payments.<\/b><\/p>\n<p><b>Will adopting IFRS 16 increase costs?<\/b><span style=\"font-weight: 400;\"> IFRS 16 does not create additional costs from &quot;air,&quot; but the assumptions can cause accounting costs and KPIs to fluctuate significantly if the wrong ones are chosen. Three key variables:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lease term<\/b><span style=\"font-weight: 400;\">: especially the renewal\/cancellation terms and the &quot;reasonably certain&quot; clause.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>IBR (Incremental Borrowing Rate)<\/b><span style=\"font-weight: 400;\">The discount rate reflects the amount a business must pay if it borrows to acquire similar assets; it depends on the term, the level of collateral, and the credit risk.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lease payments<\/b><span style=\"font-weight: 400;\">Distinguish between fixed, variable, and index-linked expenses; identify which items are recorded as liabilities and which are directly recorded as expenses for the period.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Incorrect assumptions lead to two risks: (i) lease debt becomes inflated, worsening leverage, and (ii) interest\/depreciation expenses do not accurately reflect actual commitments, distorting the unit&#039;s KPIs. CFOs should establish clear governance, for example, an IBR matrix based on (tenor \u00d7 asset type \u00d7 coverage level), instead of using a single number.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For effective governance, contract data must have complete attributes: term, price increase clause, index, renewal option, payment structure, cost center, etc. This is where operations often break down when contracts are in procurement, invoices are in accounting, and budgets are in FP&amp;A. A layer of document data standardization and tagging based on contract attributes will help reduce operating costs later on. Bizzi can support standardization and attach metadata directly from the lease expenditure document line, helping CFOs reduce the risk of &quot;choosing policies in data blindness.&quot;<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_tac_dong_gi_den_chi_phi_van_hanh_tang_workload_du_lieu_kiem_soat_thay_doi_hop_dong_va_doi_soat_lich_thanh_toan\"><\/span><b>What impact does IFRS 16 have on operating costs: increased data workload, contract change control, and payment schedule reconciliation?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>What impact does IFRS 16 have on operating costs?<\/b><span style=\"font-weight: 400;\"> This often increases sharply in businesses with many leasing contracts (retail, logistics, manufacturing) because they need to maintain the data lifecycle:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Contract inventory and data standardization.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monitoring changes to terms and conditions <\/span><b>remeasurement<\/b><span style=\"font-weight: 400;\"> (index, area, term, renewal terms...).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Handle <\/span><b>to sell<\/b><span style=\"font-weight: 400;\"> and periodic reassessment.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reconcile invoices, contracts, and payment schedules.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Audit trails are used for auditing and control testing.<\/span><span style=\"font-weight: 400;\">\n<p><\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Common &quot;breakdown points&quot; include scattered invoices by unit, contracts changing but not updated in time, and a faulty cost center leading to skewed management reports. This results in increased operating costs not only due to the personnel handling the data, but also because errors lead to multiple rounds of corrections and the risk of being questioned by auditors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In an optimal operating model, lease invoices are collected centrally, linked to the relevant contract and payment period, and then reconciled before being included in reports. Bizzi can assist at this level: centralizing lease invoices, linking metadata by vendor\u2013period\u2013contract, tracking payable obligations, and supporting payment schedule reconciliation. Once operational data is controlled, IFRS 16 operating costs are significantly reduced due to decreased manual reconciliation and increased traceability when accountability is required.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Ap_dung_IFRS_16_co_lam_tang_chi_phi_khong_phan_biet_%E2%80%9Cchi_phi_ke_toan%E2%80%9D_va_%E2%80%9Cchi_phi_trien_khaituan_thu%E2%80%9D\"><\/span><b>Does adopting IFRS 16 increase costs? Distinguishing between \u201caccounting costs\u201d and \u201cimplementation\/compliance costs\u201d<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">question<\/span><b>Will adopting IFRS 16 increase costs?<\/b><span style=\"font-weight: 400;\">&quot; needs to be separated into two classes:<\/span><\/p>\n<p><b>1) Accounting impact:<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\"> Rental costs are converted into depreciation plus interest and may front-load over time. This is a change in the form of the expense on the P&amp;L, not necessarily an increase in actual rent paid.<\/span><\/p>\n<p><b>2) Implementation and compliance costs:<\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\"> Businesses may incur both one-time and recurring expenses, including:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">IFRS 16 system\/engine and ERP integration.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Standardizing contract data, internal controls, and training.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Consulting, auditing, reconciliation operations, and audit trail services.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">If layer (2) is not well managed, the business will actually \u201cincrease costs\u201d in personnel and implementation effort, even if the rent remains unchanged. Therefore, before discussing tools, CFOs should prioritize standardizing the data source of rental documents and designing the contract-invoice-payment reconciliation flow.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">During the transition phase, centralizing invoice and rental cost data significantly reduces the effort required to collect and clean data, which often drives deployment costs. Bizzi can support this by centralizing rental expense documentation by vendor\/cost center, facilitating reconciliation and audit trail creation, helping project teams reduce rework loops and lower the personnel costs associated with &quot;data gathering.&quot;<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_co_the_lam_tang_chi_phi_von_nhu_the_nao_qua_Covenants_vi_sao_CFO_can_ke_hoach_dam_phan_ngan_hang\"><\/span><b>How IFRS 16 can increase the cost of capital through Covenants: why do CFOs need a bank negotiation plan?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">IFRS 16 increases the amount of debt recorded, potentially worsening leverage ratios and bringing them closer to the covenant threshold. If the covenant is affected, businesses may have to adjust loan terms or add collateral, increasing the cost of capital. Therefore, CFOs need to prepare:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bridge KPIs before\/after IFRS 16 (especially Net Debt\/EBITDA, Debt\/Equity, Interest coverage).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Logical explanation: rent did not increase; the change is recorded.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Policy on lease term\/IBR and safe \u201cbuffer\u201d scenarios.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Unit\/cost center lease commitment data is crucial input for covenant simulation. When lease data is centralized and standardized according to a governance structure, building KPI bridges and simulating scenarios becomes faster and more verifiable. Bizzi can assist CFOs in standardizing lease operations data for covenant simulation and preparing bank exchange documents.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_tac_dong_thue_va_rui_ro_truy_thu_thue_ra_sao_khi_%E2%80%9Cchi_phi_ke_toan%E2%80%9D_lech_voi_hoa_don_tien_thue_thuc_te\"><\/span><b>How does IFRS 16 impact taxes and the risk of tax recovery when &quot;accounting expenses&quot; differ from actual rental invoices?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">IFRS 16 recognizes expenses based on depreciation and interest, while deductible expenses for tax purposes depend on domestic regulations and actual documentation. When businesses do not closely monitor contracts, invoices, and payment schedules, common risks include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Missing supporting documents for each period or mismatched payment periods.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The variable rent\/price adjustment lacks justification.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Discrepancies between IFRS records and tax returns increase the effort required for explanation.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The CFO should establish a reconciliation mechanism between the IFRS ledger and tax records, while ensuring sufficient evidence: contracts, appendices, invoices, payment documents, and control logs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In operations, if rental invoices are reconciled by vendor\u2013contract\u2013payment period and payments are consistently tracked, accountability is significantly improved. Bizzi can support the centralization of rental invoices and reconciliation with payment schedules\/accounts payable, creating audit trails for post-audit purposes.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bang_checklist_chi_phi_trien_khai_IFRS_16_Doanh_nghiep_chiu_them_chi_phi_gi\"><\/span><b>IFRS 16 Implementation Cost Checklist: What additional costs will businesses incur?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<tbody>\n<tr>\n<td><b>Cost group<\/b><\/td>\n<td><b>Typical content<\/b><\/td>\n<td><b>When will it increase sharply?<\/b><\/td>\n<td><b>Suggestions for control based on CFO standards.<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Compliance &amp; Policy<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Develop lease\/low-value\/short-term policies, approval processes, and internal guidelines.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Multiple units\/branches, diverse contracts<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Standardize policies and clearly define permissions (owner of rented data).<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Systems &amp; Integration<\/span><\/td>\n<td><span style=\"font-weight: 400;\">IFRS 16 engine, integrated ERP\/EPM\/BI, COA mapping<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Fragmented ERP, multiple systems<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Designing a \u201cone data flow\u201d and SSOT for leased data.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Data &amp; Operations<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Create a list of contracts, collect appendices, standardize payment terms, and track modifications\/remeasurements.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Scattered contracts, invoices sent through multiple channels, and frequent changes to terms.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Prioritize the centralization of document data and regular reconciliation.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Internal audit and control<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Controls testing, audit trail, assumption explanation (IBR, lease term)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Audits require high levels of tracing and the data is inconsistent.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Increase audit trail, and ensure complete and consistent evidence storage.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Human Resources &amp; Training<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Accounting\/FP&amp;A\/procurement training, assignment of outsourced data operations.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Missing data owner, personnel changes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Set KPIs for data operations and provide role-based training.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Cost of capital (indirect)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Covenant renegotiation, capital buffer, loan term adjustment<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Leverage is approaching the Covenant threshold.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Prepare bridge KPIs before\/after IFRS 16 and buffer scenarios.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">In most IFRS 16 projects, the cost overrun lies not in the formula but in the data: inconsistent contracts, invoices, payment periods, and cost centers lead to prolonged reconciliation and difficulties in accountability. When businesses have a centralized layer and standardized tax documentation from the operational stage (for example, through Bizzi), the volume of data cleaning and reconciliation is often significantly reduced before data is incorporated into the IFRS 16 system.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"IFRS_16_buoc_chien_luoc_%E2%80%9CThue_hay_Mua%E2%80%9D_Lease_vs_Buy_thay_doi_nhu_the_nao_khi_loi_the_%E2%80%9Cngoai_bang_can_doi%E2%80%9D_bien_mat\"><\/span><b>How does IFRS 16 force a change in the \u201cLease vs. Buy\u201d strategy when off-balance-sheet advantages disappear?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When IFRS 16 brings the majority of leases onto the balance sheet, the decision <\/span><b>lease vs buy<\/b><span style=\"font-weight: 400;\"> It&#039;s necessary to base the comparison on total lifecycle costs and KPI impact, rather than just looking at Opex vs. Capex. CFOs should compare them using the following framework:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>TCO (Total Cost of Ownership)<\/b><span style=\"font-weight: 400;\"> and life-cycle cost.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Operational flexibility vs. long-term commitment.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Impact on leverage\/covenants.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cash flow impact according to the scenario.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">To make good decisions, businesses need leasing data by asset group, term, user, and payment schedule. When operational data is properly categorized according to governance structure, FP&amp;A can simulate lease vs. buy scenarios faster and with less debate. Bizzi can support the aggregation of lease costs by cost center\/asset group to provide a basis for comparing TCO and analyzing scenarios.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Dong_nhat_bao_cao_tap_doan_khi_cong_ty_me_ap_dung_IFRS_16_con_cong_ty_con_dung_VAS_06_chi_phi_phat_sinh_o_dau_va_kiem_soat_the_nao\"><\/span><b>Consolidating corporate reporting when the parent company applies IFRS 16 and the subsidiary uses VAS 06: where are the expenses incurred and how are they controlled?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If the parent company adopts IFRS 16 but the subsidiary continues to follow domestic standards, the group typically incurs costs related to standardization and consolidation:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Standardize COA and map between reporting standards.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Reconciliation and audit trail procedures.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ensure consistency in vendor\/cost center and lease contract data across all units.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Cost overruns often stem from data issues: inconsistent contracts and invoices, non-standardized reconciliation processes leading to multiple rounds of corrections and increased audit risk. A more effective approach is to standardize operational data by vendor\/cost center first, then address the mapping\/consolidation layer. Bizzi can support the centralization of cross-unit lease expense and lease liability data under a single governance structure, reducing reconciliation effort during consolidation.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bang_Before_vs_After_IFRS_16_Chi_phi_thue_va_KPI_thay_doi_nhu_the_nao\"><\/span><b>Before vs. After IFRS 16 Table: How have rental costs and KPIs changed?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<tbody>\n<tr>\n<td><b>Category<\/b><\/td>\n<td><b>Prior to IFRS 16 (operating leases \u2013 old practice)<\/b><\/td>\n<td><b>After IFRS 16 (recognition of ROU Asset &amp; Lease Liability)<\/b><\/td>\n<td><b>Meaning for CFO<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Rental cost based on P&amp;L<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rent expense (usually linear over the period)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Depreciation (ROU depreciation) + Interest (interest on lease debt)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">&quot;Rent costs&quot; change structure, not necessarily cash.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">EBITDA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Often <\/span><b>reduce<\/b><span style=\"font-weight: 400;\"> The rent expense is included in the Opex.<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Often <\/span><b>increase<\/b><span style=\"font-weight: 400;\"> Because rent expenses decrease\/disappear, they are replaced by D&amp;A + Interest (below EBITDA).<\/span><\/td>\n<td><span style=\"font-weight: 400;\">An EBITDA uplift could make KPIs look better, but a bridge explanation is needed.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">EBIT<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Affected by rent expense<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Affected by Depreciation (usually stable)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">EBIT may fluctuate differently than before depending on how it is allocated.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Net profit<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Less front-loading<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Maybe <\/span><b>front-loading<\/b><span style=\"font-weight: 400;\"> because Interest is higher at the beginning of the period<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Compare across the contract lifecycle, avoiding conclusions drawn from a single period.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Total assets<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Usually lower (less\/no recorded usage rights)<\/span><\/td>\n<td><b>Increase<\/b><span style=\"font-weight: 400;\"> due to ROU Asset recognition<\/span><\/td>\n<td><span style=\"font-weight: 400;\">&quot;Gross-up effect&quot; causes the balance sheet to swell.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Total balance<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Usually lower (lease obligations are not reflected as liabilities)<\/span><\/td>\n<td><b>Increase<\/b><span style=\"font-weight: 400;\"> due to Lease Liability<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Leverage and covenant are more sensitive.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Debt\/Equity<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Usually lower<\/span><\/td>\n<td><span style=\"font-weight: 400;\">There is a tendency <\/span><b>increase<\/b><\/td>\n<td><span style=\"font-weight: 400;\">The buffer covenant needs to be evaluated, and communication with banks\/investors is necessary.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Cau_hoi_thuong_gap_FAQ_ve_IFRS_16_va_chi_phi_cho_CFOKe_toan\"><\/span><b>Frequently Asked Questions (FAQ) about IFRS 16 and the cost for CFO\/Accountant<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"IFRS_16_co_lam_tang_tien_thue_phai_tra_khong\"><\/span><b>Does IFRS 16 increase rent payable?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">No. IFRS 16 primarily changes the recognition and classification (ROU, Lease Liability, Depreciation, Interest), it does not automatically change cash payments as per the contract.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Vi_sao_ap_dung_IFRS_16_lam_EBITDA_tang\"><\/span><b>Why does applying IFRS 16 increase EBITDA?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Because rent expenses are typically included in OEX and affect EBITDA; IFRS 16 converts rent into D&amp;A + interest, so EBITDA usually increases even if total costs may be front-loading.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"%E2%80%9CFront-loading%E2%80%9D_trong_IFRS_16_nghia_la_gi_va_anh_huong_chi_phi_ra_sao\"><\/span><b>What does &quot;front-loading&quot; mean in IFRS 16 and how does it affect costs?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Front-loading is a phenomenon where total costs (depreciation + interest) are higher in the initial period due to high interest on lease debt, then gradually decrease as the debt decreases.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Lai_suat_bien_di_vay_IBR_lay_tu_dau_de_tinh_IFRS_16\"><\/span><b>Where does the borrowing interest margin (IBR) for calculating IFRS 16 come from?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">IBR reflects the interest rate a business would have to pay if it borrowed to acquire similar assets, depending on the term, collateral, and credit risk; therefore, IBR policies should be segmented rather than a single general figure.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Hop_dong_dich_vu_co_the_chua_%E2%80%9Cembedded_lease%E2%80%9D_khong\"><\/span><b>Can a service contract contain an \u201cembedded lease\u201d?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yes. If the contract grants control over a defined asset and the supplier does not have substantive substitution rights, the lease portion may fall under IFRS 16.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"IFRS_16_anh_huong_gi_den_bao_cao_luu_chuyen_tien_te\"><\/span><b>How does IFRS 16 affect the cash flow statement?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The classification often changes: the principal portion of the lease repayment is in the financing cash flow; the interest portion may be in the operating cash flow according to policy; the total outflow does not necessarily change.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"IFRS_16_co_lam_tang_rui_ro_vi_pham_covenant_khong\"><\/span><b>Does IFRS 16 increase the risk of covenant violations?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Possibly. Lease availability increases recognized debt and sensitizes leverage ratios; CFOs should prepare bridge KPIs and a covenant renegotiation plan.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Doanh_nghiep_chiu_them_chi_phi_gi_khi_ap_dung_IFRS_16\"><\/span><b>What additional costs do businesses incur when implementing IFRS 16?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Costs include system\/integration, consulting, auditing, contract data standardization, training, and periodic audit trail\/controls testing.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bizzi_ho_tro_gi_cho_doanh_nghiep_khi_ap_dung_IFRS_16\"><\/span><b>What support does Bizzi provide to businesses when implementing IFRS 16?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Bizzi does not replace the IFRS 16 engine, but it helps standardize lease invoice data, control lease costs according to budget, and automate accounts payable\/payment schedule reconciliation, thereby reducing errors and increasing accountability.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Ket_bai\"><\/span><b>Conclusion\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">IFRS 16 doesn&#039;t automatically increase rent costs, but it alters the structure of rental expenses on the P&amp;L, increasing recognized debt and making KPIs\/covenant more sensitive. In practice, businesses often &quot;increase costs&quot; in data implementation and operation: centralizing contracts, standardizing documents, reconciling payment schedules, and maintaining audit trails.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, to control IFRS 16 costs and risks according to CFO standards, start from the data foundation: normalize invoices \u2013 contracts \u2013 payment periods \u2013 cost centers and design a periodic reconciliation flow.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At this operational level, Bizzi can support the centralization of lease documentation, budget-based lease cost control, and accounts payable\/payment reconciliation, helping businesses implement IFRS 16 &quot;correctly and sustainably&quot; instead of spending effort on adjustments later.<\/span><\/p>","protected":false},"excerpt":{"rendered":"<p>IFRS 16 kh\u00f4ng l\u00e0m \u201cti\u1ec1n thu\u00ea ph\u1ea3i tr\u1ea3\u201d t\u1ef1 t\u0103ng l\u00ean, nh\u01b0ng l\u00e0m thay \u0111\u1ed5i c\u00e1ch doanh nghi\u1ec7p ghi nh\u1eadn chi ph\u00ed thu\u00ea tr\u00ean b\u00e1o&#8230;<\/p>","protected":false},"author":56,"featured_media":999980066,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[76,263,86],"tags":[],"class_list":["post-999980060","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-goc-nhin-cfo","category-kien-thuc","category-giam-sat"],"acf":[],"_links":{"self":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999980060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/users\/56"}],"replies":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/comments?post=999980060"}],"version-history":[{"count":1,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999980060\/revisions"}],"predecessor-version":[{"id":999980069,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999980060\/revisions\/999980069"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media\/999980066"}],"wp:attachment":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media?parent=999980060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/categories?post=999980060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/tags?post=999980060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}