CB Richard Ellis (CBRE) has embarked on its ground-breaking, environment friendly initiative which promises to change how commercial real estate is managed (see "CBRE Goes Carbon Neutral: Planet Building is Born!", The RealcommEDGE, April/May 2008). The Planet Building initiative is based on the idea that a commercial building is an ecosystem that can have a positive effect on surrounding ecosystems by providing a good example. The effort aims to improve operational sustainability and efficiency at CBRE-managed properties.
Nice idea... but are the principles of sustainability and environmentally conscious property management compatible in a highly competitive, profit-driven marketplace? CBRE believes they are, and to prove it, has combined technology and productivity initiatives to deliver end-to-end accounts payable (A/P) processing tasks in one interconnected, paperless processing flow.
"By functioning collaboratively, the revamped A/P processing system accelerates processing time while reducing variables that can lead to human error and material waste," said Patty Proshek, Senior Managing Director at CBRE. "This initiative demonstrates that environmentally conscious operations are indeed achievable, sustainable, and profitable; and thanks to the technology and global shared services involved, return on investment is realized almost immediately."
Team Builds End-to-End Strategy
CBRE and its vendor partners have built an end-to-end system that sends an invoice to each partner in turn (like a baton in a high-tech relay race), creating an interdependent work flow that accelerates processing time. Because redundant data entry and manual tasks are eliminated, the margins for error are greatly reduced and approval processes are more tightly controlled. Taking paper out of the traditionally paper-heavy invoice and payment process has obvious environmental implications, as well as reducing materials and processing costs.
In the partners' shared view, a commercial building is a "system of systems" encompassing numerous interacting and interdependent relationships. This environment is extremely dynamic: energy and resources flow, materials move constantly, and subsystems impact each other.
Electronic Processing Drives Efficiency
Electronic payment is an essential element of the process. Bank of America (BoA) pays vendors either through automated clearinghouse (ACH) or by check, eliminating the need to print checks internally. This process helps CBRE lower transaction costs, reduces payment processing errors, and makes cash flow more controlled and predictable. In addition, BoA has undertaken primary responsibility for persuading CBRE's suppliers to accept the electronic payment option. "We have a marketing team dedicated to demonstrating the advantage of electronic payments and showing how, at the end of the day, it's a more effective way to receive vendor payments in a timely fashion," said Doug Cummings, Senior Vice President of BoA's Global Treasury Services Division.
E-procurement Service Allows Procure-to-Pay
What about the myriad supplies, contract building services, and environmental systems that keep a commercial building viable for its tenants? The key player here is an e-procurement service provider, SiteStuff, which provides CBRE a single, paperless purchasing source and financial settlement partner, ensuring corporate-wide standardization for MRO supplies. Its contract management capability includes an integrated spend-management solution that allows greater visibility into all activity. In addition, the SiteStuff "Green Catalog" delivers a comprehensive online catalog for eco-friendly products. This lets CBRE procure MRO supplies in accordance with its carbon-neutral effort.
With this fusion of best-practice solutions and technology, payment is made in 5 days or less, compared with up to 45 days under the old paper-oriented system. The process integrates with the core property management and accounting systems with which CBRE manages its properties. Moreover, it's transparent, with invoice status being clear to all parties at every step. With the volume of invoices that CBRE handles, the results -- and the return on investment -- are immediately apparent.
Results Impress
CBRE and its partners spent a year building an optimal accounts payable processing solution. The company initiated the project in January 2008, and expects to complete it in July. Once fully implemented, CBRE anticipates significant cost savings and dedicated head-count reductions. Five thousand of its vendors have signed up for the paperless process, with more joining every week. The initiative has also generated new operational efficiencies for its clients and properties, including consistent end-to-end business processes and stronger fiscal controls.
"Paperless processing positively affects vendors, customers, banks, and employees who no longer have to file paper day after day," said Proshek. "Eliminating the chemicals and raw material and the resources needed to process and store the paper is just one of the ways that we can advance green initiatives and influence all 'change hosts': tenants, customers, engineers, contractors, maintenance workers, vendors and others."
A collaborative partnership of four solution providers constitutes CBRE's paperless A/P system: Yardi Systems subsidiary companies rCash and SiteStuff, Inc., Cambridge Solutions Ltd., and Bank of America.
