The old way
At Houston-based Camden Property Trust, automating both the purchasing and billing process has greatly improved spending visibility. Now, it sees not only how much it spends with paint supplier Sherwin-Williams but also the exact products–whether paint, brushes, or rollers–that it’s buying. Laurie Baker, regional vice president at Camden, which has been using OpsTechnology since 2000 (Camden is an investor in the firm), says that wasn’t how things used to be. “You would have to go to your vendors and ask them for a report of what you were buying from them,” Baker says. “That’s a little bit uncomfortable when you’re trying to negotiate discounts.”
Now, with her purchasing process automated, she can see reports of the exact SKUs she buys, and from whom, and use the information to get better discounts and rebates. In terms of compliance, she knows she’ll get those discounts when the invoice comes, since the system is set up with the specific prices worked out between each buyer and supplier. At the property level, Baker has been able to nearly eliminate off-contract, or “maverick,” spending, because only approved vendors are on the system. Property managers access qualified vendors through a Web browser, customized to their specific property. “Now, they can’t buy the wrong thing, and we can’t be overcharged,” Baker says. “That’s a huge win.”
By centralizing and automating the invoices and payments process, the firm has also been able to reduce the head count devoted to entering invoices into its system by 2.5 full-time equivalents, resulting in a savings of $60,000 at headquarters annually. It’s now working to cut its average payment cycle from 40 days to 10 and garner an additional 1 percent to 4 percent savings in prompt-payment discounts from vendors.
The importance of automating the administrative tasks associated with invoicing and payment shouldn’t be overlooked. Boston-based Berkshire Property Advisors, a former REIT that privatized itself in 1999 and has 18,000 units under management, hasn’t embarked on full-blown automated purchasing yet, but the firm is using Carrollton, Texas-based RealPage’s OneSite application at its 50-plus properties to automate the billing cycle from the very beginning.
“With RealPage, we have a product where our managers can enter the purchase order for goods and services, and then, when the invoice comes, they match it back to the purchase order at the field level, triggering the transmission of an electronic invoice back to our main system in Boston,” says Dan Robertson, Berkshire’s vice president of information systems. Not only has the process virtually eliminated the need to overnight invoices back to headquarters, it’s also ensured proper spending limits are being enforced. When a manager creates an order that’s above his or her pre-approved spending limit, it’s automatically kicked up to the next-highest executive for approval. By being able to redeploy personnel in its main office, Berkshire estimates that it’s saved the annual equivalent of at least one full-time employee.
“It’s one of the easier processes to automate on site,” says Dean Schmidt, president of the OneSite division at RealPage, which is also developing online cataloguing and purchasing capabilities within its application. “One of the only things that changes is the way I do my ordering, which is [done] on a computer rather than manually.”
At a cost of anywhere from $500 to $1,800 per property annually, depending on your technology provider and what modules you choose to employ, automating the purchasing and invoicing process isn’t cheap. But executives who have been down that road say it’s more than worth it. While UDRT’s savings are probably an exception on the upside, executives interviewed for this article estimated a timeframe of about 18 months to get your money back from an investment in this area. “From our perspective, the money saved at the corporate office alone virtually paid for the product in the first year,” Berkshire’s Robertson says.
–Joe Bousquin is a freelance writer in Newcastle, Calif.
