Cash Management in Commercial Real Estate: Benchmarks, Technology, Challenges, Opportunities

The previous blog in our five-part blog series analyzed results from treasury professionals that work for healthcare companies, pulling from the Cash Management in a Digital World: Today’s Landscape and What’s on the Horizon survey. This blog focuses on results from treasury professionals that work for commercial real estate companies.

Cash management in real estate accounts payable often means AP and treasury teams are buried in paperwork, with a massive number of high-dollar transactions, stymied by limited control and visibility across a network of vendors, and bogged down in endless hours spent on mundane manual tasks and paper checks.

Among survey respondents, the most common cash management challenges faced by treasury teams in commercial real estate are:

• Time misallocated on non-value-add activities
• Regulatory changes
• Difficulties in collaboration with accounts payable (AP) and accounts receivable (AR)

Among survey respondents, treasury teams in commercial real estate identified manual and repetitive tasks as the top cash management challenge more often than treasury teams that work at companies in manufacturing, higher education, warehousing, and transportation/logistics. Twenty-five percent (25%) of commercial real estate teams identified manual and repetitive tasks as the top challenge in cash management. This suggests that treasury teams in commercial real estate might not have access to the right technology. Relying on spreadsheets and/or disparate systems can fuel the prevalence of manual and repetitive tasks related to cash management.

The use of a TMS as the primary cash management tool is high among the real estate companies surveyed (59%), while the use of spreadsheets is surprisingly low (6%). On the surface, technology in and of itself is not the main issue relative to the cash management challenges faced by commercial real estate treasury teams.

Figure 1. Primary Tool Being Leveraged in Managing Cash  

The right technology and functionality are often less than half the battle that treasury teams face in leveraging technology to deliver cash management success. It is also about how technology is used to deliver visibility into all cash movements, make data driven decisions regarding payments and receipt types and timings, and facilitate collaboration between all those who impact cash inflows and outflows. This is an area of opportunity for real estate treasury leaders to explore and may offer low hanging fruit to impact the bottom line.

Difficulties in collaboration with accounts payable (AP) and accounts receivable (AR) by commercial real estate professionals may be driven by silos between AP and treasury teams and between AR and treasury teams. Forty-one percent (41%) of commercial real estate treasury professionals reported that treasury and AP teams work in silos, twenty-four percent (24%) of professionals reported that AR and treasury teams work in silos, and twenty-seven percent (27%) shared that silos exit within their own treasury team.

The next question to address is if commercial real estate companies will invest in upgrading technology related to treasury operations in 2025. Well over ninety percent (96%) of companies surveyed plan to do just that in 2025. It is clear that the companies in commercial real estate will be investing in the technology and people that they believe will impact the strategic value delivered by their treasury teams in 2025. A blind spot that these companies would also do well to address is the existence of silos within their own treasury teams and between treasury and AP, and treasury and AR.

AP automation solutions can further empower cash management success for real estate companies by:

• Delivering visibility across the AP process with real-time data to optimize working capital, track transactions, and review spend.
• Freeing AP and treasury resources to be more strategic by giving back all the hours currently spent on mundane labor-intensive manual tasks.
• Stopping fraudsters in their tracks through digital authentication of vendors and their bank account information.
• Improving cashflow by avoiding late payment fees, capturing more of the available rebates offered by vendors, and scheduling payments for precisely when you want to pay.

The real estate market's need for automated payment systems is clear. By embracing technology, companies can gain better visibility and control over their finances, streamline their operations, and position themselves for growth and success in an increasingly competitive market. The shift towards automated payments not only addresses the current inefficiencies but also paves the way for a more dynamic and responsive real estate industry.

Stay tuned for the final blog in this five-part blog series which will focus on an analysis of the survey results from treasury professionals that work for higher education institutions.