Electronic Invoicing

Benefits for real estate

By Matthias Muench on Jul 27, 2020 in Global

Consider how much of your everyday business can be done without paperwork. If you want to fly, for example, you can do everything from booking your seat to gaining clearance to board the aircraft using just your cell phone.

In contrast, many national and multinational real estate companies still generate, circulate and approve invoices using paper and manual routing. This highly inefficient process is costly, time-consuming and contrary to prevailing environmental sensibilities.

A paper invoice can cost as much as € 4 to generate and route by air and ground transport. The cost of processing it can set the recipient back anywhere from € 15 to € 30 because he or she often has to rekey the information into his or her own database, then route it to multiple approvers. There can be dozens of touchpoints, each one of which consumes resources and presents opportunities for error.

And that’s just one document. Multiply this sequence by the hundreds or thousands of vendors and partners some real estate firms deal with. This approach to invoice processing doesn’t just seem outdated with the potential to drag a business down – it is.

Payables made easy

Real estate companies’ profit margins might remain slender through the COVID-19 era. Besides that, tenants, investors, communities and regulators are imposing increasingly stringent environmental performance standards for businesses. These developments might inspire real estate companies in Europe to consider replacing the manual steps – and paper – in the accounts payable process with advanced software applications that scan invoices into electronic files, route them to approvers and pay suppliers with electronic funds transfer.

This approach can sharply reduce costs as well as the material and energy required to create and move paper invoices to their various destinations. In fact, savings of up to 80% on per-invoice costs and 75% on per-invoice processing time have been documented. And with governments in Europe split over standards for invoice content and processing, despite the mandate spelled out in 2014/55/EU, automated invoice processing solutions give the real estate industry an opportunity to position itself as the continent’s role model for efficient, environmentally friendly invoice processing.

Equipped with electronic invoicing capabilities, real estate companies can redirect the many hours they spend manually scanning and keying invoices to other priorities such as tenant relations, marketing, leasing and maintenance. Mobile applications add even more convenience and efficiency.

Enhanced environmental stewardship

Electronic invoicing also carries the potential for appreciable sustainability benefits. Germany alone, for example, generates about 29 billion paper invoices annually, according to information released by the country’s federal government in 2017. European Union countries could save 250,000 tons of writing paper, enough to fill more than 80 freight trains, by relying on electronic invoices, a study sponsored by the University of Aschaffenburg reported that same year. And just imagine the corresponding reduction in greenhouse gases.

Benefits span the procurement process . .

Advanced software applications for real estate encompass all aspects of day-to-day purchasing, not just invoice processing. Organisations can shop for, order and pay for virtually any business-related product or service online through a centralised purchasing system that’s built into the core technology platform. This approach has delivered value for many real estate company managers in the U.S. and elsewhere, including Arizona-based Arcadia Management Group Inc., whose benefits from adopting an end-to-end procurement system included 60% lower per-invoice costs.

Other features of end-to-end procurement systems include analytics capabilities that help real estate company managers identify areas for improvement and compare their processes to industry benchmarks. Some real estate procurement technology providers will even take over the task of preparing and sending payments to vendors.

. . including vendor management

Along with simplifying shopping, purchasing and payment, automated procurement solutions give Real estate companies valuable tools for interacting constructively with their vendors. Performing vendor management in a single system of record virtually eliminates the possibility of duplicate invoices. Clearly defined standards and workflows help real estate firms mitigate risk in vendor onboarding. For their part, suppliers can use the system to keep their profiles current, submit invoices and check their status, and upload insurance certificates, among other things. They know their invoices will be handled expeditiously and accurately, strengthening relationships with the real estate industry participants they serve.

Stability in uncertain times

Transforming the procurement process with new technology is all about adding value. The innovations described here can help site managers direct energies spent labouring over invoices – and finding space to store them – to higher-value priorities such as compliance and customer service. Real estate companies can make purchasing decisions with comprehensive, real-time data that’s only available from a centralised system and reduce risk in their vendor relationships. And not least, they can make a real difference in mitigating the environmental impacts associated with creating, copying and routing paper invoices.

European real estate organisations can leverage these tangible gains to weather current challenges and position themselves to earn even greater success in more stable business climates. In the process, they can create new best practices for every type of business.