From 1 January 2026, two key updates to financial reporting standards came into force and businesses should be aware.

The changes to lease accounting and revenue recognition are not just technical updates. They will alter the way financial performance is reported, potentially impacting everything from covenant calculations and investor relations to management reporting and internal KPIs.

Whether you’re an SME, a fast-growing tech firm, or a private equity-backed business, these updates will affect how you present your financials and how stakeholders interpret them.

Here’s what you need to know:

Lease Accounting: on balance sheet from day one

Going forward, most leases from office space to fleet vehicles must be recorded on the balance sheet as both an asset and a liability.

No more hiding behind the ‘operating lease’ treatment, this change brings more transparency, but also more scrutiny.

Short-term and low-value leases are exempt, but for everyone else, expect an impact on gearing ratios, EBITDA and covenant calculations.

Revenue recognition: a five-step framework

Revenue must now be recognised using a new five-step model that applies to all customer contracts.

It’s about consistency and clarity but it could also mean recognising income at different times than before. The result? Potential changes to reported performance, bonus structures, and internal metrics.

Businesses will need to revisit their revenue streams, assess how and when income is recognised, and ensure systems and processes are aligned.

These changes are coming fast and it’s essential that finance teams and business leaders are ready.

At Wilson Partners, we’re helping clients assess the impact, update their systems, and embed the changes into their reporting. If you haven’t already begun your review, now is the time.