Ten Real Estate Leasing Cost Savings Opportunities
Leverage Real Estate Lease Administration Software to Reduce Your Real Estate Leasing Costs
At many companies the real estate leasing process has not yet been fully optimized. Subleases are poorly managed, over-billing by landlords goes unchecked, and critical contract dates to expand or renew at discounted rates are missed. Case studies have demonstrated that companies that apply best practices to real estate lease administration can realize savings of 2-4% of their real estate portfolio.
Many companies are re-evaluating their real estate lease administration program as part of an effort to outsource or centralize the corporate function across different geographic regions. Other companies are evaluating how to optimize real estate systems, processes, and controls to support the new lease accounting standards. In either case, investment in a new real estate lease administration software application might be worth considering.
In this article we outline 10 Opportunities for Real Estate Leasing Cost Savings that may apply to your organization.
10 Potential Opportunities for Real Estate Leasing Cost Savings
1. Billing Errors
Are you auditing your monthly bills for errors and discrepancies caused by the landlord? If not, you may be paying bills twice or paying rent on properties you have already vacated.
Consider routine audits of your real estate invoices to ensure you are not overpaying monthly rent invoices.
2. Desktop Audits
Are you conducting quarterly or annual desktop audits of your real estate leases to identify errors? If not, you may be missing out on free rent opportunities or over-paying for common area maintenance charges.
Consider leveraging an outsourced real estate lease administration service to perform periodic desktop audits of your invoices to minimize your potential cost leakage.
3. Sublease Collections
Are you properly collecting revenues from tenants with subleases? Many companies do not pass along changes in variable rent or operating expenses.
Consider leveraging an outsourced real estate lease administration service to manage the day-to-day administration of subtenants and the accounts receivable process.
4. Security Deposit Collections
Are you collecting security deposit refunds owed to you at the end of a lease? If not you could be forfeiting hundreds of thousands, if not millions, of dollars to landlords.
Consider establishing automated reports to track and notify corporate real estate groups of when security deposit refunds are owed.
5. Commencement Date Errors
Are your Accounts Payable teams using the correct commencement date to start rent payments? If not, you may be over-paying monthly rent at numerous properties.
Consider automated notifications and regular information exchange between the Corporate Real Estate and Accounts Payable teams on new leases.
6. Critical Date Errors
Are you proactively monitoring the critical dates in your real estate leases? If not, you could be passing up opportunities to renew or expand leases at discounted rates.
Consider automated workflows to notify stakeholders of upcoming clauses in real estate leases that could be advantageous to exercise.
7. Past End of Term
Are you paying for leases on properties that you no longer occupy? Or forgetting to renew leases on time? If so, you could be losing tens, if not hundreds, of thousands of dollars.
Consider instituting reports to monitor upcoming or overdue lease renewal dates to minimize the risk of excess rent changes.
8. Late Rent
Are you incurring late fees on real estate leases because you cannot process your invoices in a timely manner?
Consider re-engineering your accounts payable and invoice processing workflows to accelerate real estate payments.
9. Space Optimization
Does your headquarters team have visibility into the true space utilization of various properties around the world? If not, you may be paying for thousands of empty cubicles and conference rooms.
Consider automating reports to provide headquarters with visibility into actual occupancy rates within each of your properties around the world.
Do you have several different, autonomous real estate functions in different geographic regions? If so, you are missing out on the cost savings opportunities and best practices that a centralized function can provide.
Consider consolidating and centralizing all facilities administration into a global Corporate Real Estate function that will implement standardized processes and best practices around the world.
If your answers to the questions above did not bolster much confidence then it may be time to consider investing in real estate lease administration software.
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Learn More about the New Lease Accounting Standards
White Papers, Handbooks, and Research Studies
With the deadlines for the new lease accounting standards approaching quickly, many companies are asking how software can help automate the tasks required for the transition period. US GAAP filers adopting ASC 842 will be required to provide three years of comparative reporting.
Learn the differences between contract-level and asset-level lease accounting in this technical white paper. Review examples of the impact of asset-level decisions, judgments, and events for material handling, data center, and IT equipment.
Considering lease accounting software to comply with the new FASB or IFRS standards? Download this eBook to understand the potential time and cost savings opportunities resulting from automation of lease classification and financial reporting.