The commercial real estate (CRE) industry continues to transform, embracing new ways to leverage electronic payment options. Digitization of the leasing process, increased fluidity, and advances in automation are improving resident experiences.
Partner Insights interviewed Lisa McDonnell, who brings her deep knowledge of financial management techniques to her role at JPMorgan Chase. McDonnell currently serves as Senior Financial Manager for the Real Estate Banking Financial Services team, where she is focused on providing expert financial management guidance to some of the largest real estate companies in the industry.
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Commercial Observer: Why has the role of the treasurer expanded into day-to-day operations in many industries, including commercial real estate?
As financial markets become increasingly complex, treasurers are taking on a more prominent role in managing financial risk, strengthening capital structures, and ensuring compliance with regulatory standards. Treasurers are also responsible for overseeing liquidity management strategies, which have taken center stage. Cash flow optimization involves ensuring there is sufficient funding to meet short-term and long-term obligations. The integration of financial management systems into financial planning and various responsibilities has led to greater collaboration among treasurers across the organization.
Commercial Observer: How can treasurers leverage embedded banking to increase revenue and profits?
Treasurers can now monetize value-added services by offering premium features, enhanced capabilities, and personalized insights (such as advanced analytics, risk management tools, and advisory services) as part of embedded banking services. Embedded banking also enables treasurers to analyze customer data, transaction history, and behavioral patterns to identify opportunities. By embedding banking services directly into the platform and workflows, treasurers can create a seamless, integrated financial experience that drives business growth and unlocks new revenue streams.
Commercial Observer: How can commercial real estate liquidity structures be strengthened to facilitate the smooth buying and selling of properties?
A company's current liquidity structure can be optimized by deploying cash buffers and centralizing treasury operations. This improves cash forecasting and visibility, and reduces reaction time to changing macro environments. Today's technology platforms maximize the impact of property listings while focusing on valuation criteria and due diligence efforts. We prefer online marketplaces and auction platforms, which attract a wider range of buyers and sellers and expand the market.
Commercial Observer: Can you leverage business process automation to free up internal cash while reducing debt and interest burdens?
Automation improves efficiency by shortening processing times and payment cycles. It also provides real-time, more useful data, allowing businesses to make more informed decisions. Automation also speeds up the collection and processing of revenue-related data, helping businesses become aware of funding opportunities.
Organizations that leverage automation streamline business processes, improve operational efficiencies, enhance cash flow management, and realize cost savings – all of which contribute to lower debt levels and interest expenses.
Commercial Observer: Why has cash flow forecasting become so important in today's financial environment?
Cash flow forecasting is essential for debt management, payment and compliance with debt covenants. On the other side of the balance sheet, effective resource allocation enables companies to make informed decisions about investment priorities and capital expenditures, allocating capital to initiatives that generate the highest returns. Forecasting works in conjunction with strategic planning and promotes effective risk management. We are constantly working with our clients to improve their ability to identify potential cash flow gaps, liquidity risks and financial vulnerabilities. Improving financial stability is a key component for greater resilience during times of economic uncertainty and market volatility.
Commercial Observer: What are some ways owner/operators can optimize their working capital operations?
The main way is to implement efficient cash management techniques, which starts with maintaining detailed cash flow forecasts to effectively manage inflows and outflows.
We also recommend strengthening accounts receivable processing to speed up collection of rent and other receivables, which can lead to leveraging the company's technology platform. Operating costs can be controlled through regular audits and negotiation of variable costs such as utilities. Lease audits should also be kept current and active.
Commercial Observer: What are some ways technology can be used to improve the rent collection process and resident experience?
Providing digital options for rent payments reduces the hassle of physical checks and allows for automatic payments. Apps are also emerging that allow residents to access their accounts as well as request maintenance and have two-way communication with managers. Online portals and platforms help simplify leasing and increase community engagement to reduce turnover.
Commercial Observer: How are macroeconomic events impacting financial management operations and strategies in your industry?
Economic instability causes interest rate fluctuations along with changes in central bank policies. The impact can ripple through to companies that rely on debt financing for real estate acquisitions, developments and refinancing. To address market uncertainty, financial managers may deploy interest rate hedges or adjust debt structures to mitigate risks and optimize financing arrangements. Credit market conditions, exchange rate fluctuations, inflationary pressures, regulatory changes and compliance requirements also require constant attention and strategy.