7 considerations for better spend control in property management
By Andy Hamilton, Consultant, Proactis, this article first appeared on the MRI Real Estate Software Blog.
Over the years, I’ve worked with many organisations in the property management sector including CBRE, Knight Frank and Savills, to help them drive better value from their spend control and management processes. Through this experience a number of key themes have emerged:
- React to changing market conditions with flexibility and agility
Whether you’re managing your own company’s properties or those of your clients, controlling and managing spend is critical in terms of getting the best value possible for the goods and services you purchase – no matter how things change.
If the latest events have taught us anything, it’s to expect the unexpected. And with that mindset brings the need to develop agile strategies that can change should your environment shift overnight. Time doesn’t stand still, financial obligations must be respected, and business needs to keep going.
Some companies have been able to adapt their processes. For example, Proactis customer Honeywell expanded its production at its aerospace facility to manufacture N95 masks for Covid-19 protection. And other institutions, such as the University of Sussex, have been able to embrace technology to ensure they can keep functioning and, in this example, delivering higher education.
Agile Procure-to-Pay (P2P)
also proved critical for Bright Horizons, with a portfolio of over 320 nurseries, as it meant the company was able to respond to the pressures Covid placed upon the business when it was forced to shut the majority of nurseries during lockdown. Having the ability to control and manage cost effectively and centralise more purchasing was key to its ability to successfully navigate a course through the initial lockdown.
For Finance teams in many organisations, I have found that the situation has actually highlighted a number of areas that can be improved – not only short-term fixes, but for the long-term running of the business. For example, using systems that connect teams, simplify reporting, centralise data and connect with the wider organisation to redistribute workload and reduce paperwork.
The impact of Covid has forced many to accelerate their journey on the path to digital transformation.
- Make it simple, but accurate
Obtaining best value is critical, not only to success, but in some cases to survival. An agile approach to spend management helps achieve this by improving the effectiveness and transparency of both strategic and tactical sourcing processes, while reducing administrative time and effort. Savings can be realised by driving on contract spend and proactive expenditure control through the P2P front end
In complex property organisations in particular, it is key to be able to accurately determine who should authorise spend, how the recoverability should be classed and ultimately where it should be allocated through the underlying property management system.
- Gain visibility and control
Visibility of spend, through the entire process from request,, through comparison against service charge, to summary analysis, is invaluable to support every level of decision-making. Budgets are tight across most businesses, with many having to do more with less.
It’s crucial for property management firms to closely manage costs against budgets, ensure that costs are controlled within the boundaries of the service charge provision, and have the flexibility to react to operating changes at any stage in a process.