How technology can improve your financial management and property engagement

Investment and development prospects across the Canadian commercial real estate (CRE) industry continue to pose unique challenges and opportunities. The shared constant across real estate companies is the expectation of financial prudence and effective stewardship of assets under management (AUM). As a result, many companies are investing in informed decision-making technologies that offer better access to accurate and timely information.

Digital finance a growing priority

The ability to anticipate and adapt to change is integral to staying relevant in today’s constantly evolving digital landscape. Disruptive innovations and evolving business models are changing tenant and investor reporting expectations and redefining how you engage in the industry.

As both society and corporations continue to grow increasingly digital, so do the demands to realign community and organizational priorities — to grow revenues in new markets and control costs to maximize profitability. Finance departments are usually the gatekeepers of this information and disseminate it to other parts of your business, such as operations and property management. This reinforces the need for a digital finance strategy. Not only to report on the day to day; but also to model, budget and scenario plan for future disruption to business operations and the assets you manage.

Seeing further and wider

A robust financial model remains one of the most powerful devices in your company’s tool belt to help evaluate the effects of market volatility. Client engagement is interactive; so your financial and business models are important for optimizing the value of your assets, supporting your growth, profit and sustainability and maximizing community engagement in both the short- and long-term.

Some steps you can take to improve your decision making around digital strategy investments include:

• Identify the backbone of your financial management operating system — If you’re just getting started as an owner-managed business, perhaps invest in an entry-level general ledger (GL) system to track engagement or augment your existing finance function.
• If you’re a real estate company with a dedicated finance team you may benefit from standardizing on a more robust Enterprise Resource Planning (ERP) system.
• Use financial and operational models for effective scenario planning — If you’re using spreadsheets to run your business perhaps it’s time to consider a dedicated Financial Planning and Analysis (FP&A) platform.
• Build adaptability and transferability to finance as a partner to other departments.
• Make organizational agility and insightful financial analysis possible across all departments.
• Support efficient financial processes and critical performance management capabilities.
• Make better predictions

Without historical data from current investments — or markets to understand the likelihood of future ones — it’s difficult to forecast revenue and operating expenses. This type of scenario planning is often done manually through spreadsheets. However, business analytics technology, in conjunction with industry-specific ERP systems, has become increasingly popular for combining financial and operational data in a centralized system. This allows for automatic data collection to track and analyze financial and operational information, resulting in:

• More accurate business planning, budgeting, forecasting and scenario planning
• More predictable revenue and expense management
• Increased operating margins and organizational flexibility
• Better communication and buy-in between groups (e.g. internal, board, tenants)

Beyond the balance sheet

Business leaders and properties often rely on finance to provide the right information in real-time to help make informed decisions and drive operational effectiveness. By leveraging data from your existing ERP and transforming it into actionable insight through Financial Planning & Analysis (FP&A) technology, finance supports the ongoing and future success of the business and AUM with better collaboration, company-wide standardization, and visibility to individual property management.

The need for real estate companies to plan and revise budgets is critical, especially when it comes to protecting reserves, understanding maintenance fees, costs and understanding the effects of aging properties on resales. With an integrated planning approach, driven by a holistic digital finance strategy, technology is transcending your business operations to your portfolio properties.

Understanding what processes you can automate to improve decision-making, optimize costs and manage risks is crucial in setting a foundation for continuous improvement. CRE companies of all sizes can look to technology as a change enabler and harness a digital finance strategy to translate strategic planning into tactful execution that drives both behaviour and AUM performance.

For more information, contact Daniel Caringi, Partner, Consulting and Technology Solutions, at 416.596.1711 or daniel.caringi@mnp.ca