# Have you underestimated the value of your CRE department? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2018-02-16 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Unlocking the Value: Key Metrics for the Finance Department Meta Description: Discover how the CRE department can leverage data-driven decisions to influence financial planning and business value. Learn more with Qube's Horizon Tags: featured Tag URLs: featured (https://financedigest.com/tag/featured) URL: https://financedigest.com/have-you-underestimated-the-value-of-your-cre-departmenthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd160218-1-1736842976956-compressed.jpg) **The key metrics the finance department is missing out on** **Gavin Maze**, Business Development Manager – Occupier Division, Qube Global Software Property – whether it be owned or leased, large or small, specialised or generic – comprises a large, if not the largest, proportion of [business](https://www.financedigest.com/how-to-start-a-business-in-louisiana.html) assets. The role of the CRE [department](https://www.financedigest.com/will-time-derail-fiduciary-delays-arrival.html) varies across sectors, [company sizes](https://www.financedigest.com/multigrain-bread-mix-market-size-share-top-leading-companies-consumption-drivers-trends-forces-analysis-revenue-challenges-and-global-forecast-2029.html "Multigrain Bread Mix Market: Size, Share, Top Leading Companies, Consumption, Drivers, Trends, Forces Analysis, Revenue, Challenges And Global Forecast 2029") and structures. In the past, rather than being viewed as one of the key pillars holding the organisation up, it was often placed as a less strategic [department](https://www.financedigest.com/will-time-derail-fiduciary-delays-arrival.html) [grouped with other support](https://www.financedigest.com/how-to-get-the-most-out-of-your-peer-to-peer-support-group.html "How to get the most out of your peer-to-peer support group") funtions such as IT. However, in [recent years we’ve witnessed](https://www.financedigest.com/leno-bags-market-witness-a-spike-in-growth-pace-recent-improvements-in-pricing-models-fmi.html "Leno Bags Market Witness a Spike in Growth Pace Recent Improvements in Pricing Models: FMI") a change. Currently, no other [department](https://www.financedigest.com/ai-in-the-finance-department-augmenting-not-replacing.html "AI in the finance department: augmenting, not replacing") has the authority to directly influence financial planning as much as CRE and their role is responsible for far more than simply managing the occupied and sub-let portfolio. In the wake of the financial [crash](https://www.financedigest.com/g20-watchdog-homes-in-on-decentralised-finance-after-ftx-crash.html "G20 watchdog homes in on decentralised finance after FTX crash"), the C-suite turned to CRE to radically reduce occupancy costs. Now that the crisis has retreated, cost-cutting is still a primary objective. However, beyond the bread and butter of reducing the [balance sheet](https://www.financedigest.com/ecbs-villeroy-lays-out-plan-for-shrinking-balance-sheet.html "ECB’s Villeroy lays out plan for shrinking balance sheet"), we’ve seen a development in the complexity of the CRE’s job description. In recent years, corporate KPIs have extended to softer metrics such as employee wellbeing and workspace optimisation.Across the board organisations expect more for less – adding to the pressure on the CRE [department’s](https://www.financedigest.com/will-time-derail-fiduciary-delays-arrival.html) shoulders. **The value CRE metrics can bring to the finance table** [Technology has been key to revolutionising the CRE’s role](https://www.financedigest.com/ethical-financial-selling-the-role-of-compliance-technology-and-sales-enablement.html "Ethical Financial Selling: The Role of Compliance Technology and Sales Enablement ") from a reactive to a proactive one. The leaps and bounds made in PropTech now means that the CRE can make data-driven decisions. With data [analysis there is the potential to unlock business value](https://www.financedigest.com/pediatric-hiv-infection-treatment-market-by-covid-19-impact-analysis-volume-and-value-revenue-business-opportunity-future-projections-and-key-trends.html "Pediatric HIV Infection Treatment Market By Covid-19 Impact Analysis – Volume And Value, Revenue, Business Opportunity, Future Projections, And Key Trends"), find additional profit margin, and directly influence change in the [business.](https://www.financedigest.com/how-to-start-a-business-in-louisiana.html) CRE executives can probe in-depth and in real-time, past and [projected insights](https://www.financedigest.com/lingerie-market-projected-to-touch-a-valuation-of-us55-83-billion-by-2024-tmr-insights.html "Lingerie Market Projected to touch a valuation of US.83 Billion by 2024 – TMR Insights"), not only quickly but in a format such as KPI reports that are easy for the CFO or CEO to digest. Below are a couple of scenarios in which the CRE can provide the C-suite with influential [data](https://www.financedigest.com/how-to-drive-a-data-culture-in-the-finance-industry.html "How to drive a data culture in the finance industry") for financial benchmarking purposes. As well as key metrics that can give an overview of the organisations’ [real estate](https://www.financedigest.com/how-to-buy-income-producing-real-estate-without-your-own-money-or-credit.html "How to Buy Income-Producing Real Estate Without Your Own Money or Credit") portfolio using property, asset, facility and financial management platforms – such as Qube’s Horizon software. **Smart downsizing** By nature, real estate assets are clunky. As property value continues to soar in corporate hotbeds such as London, if not done right, CREcan potentially be a serious drain on resources. Say for example; the CEO of an organisation calls a meeting and explains to the board that, after a trying financial year, the company must [cut costs](https://www.financedigest.com/hm-to-cut-costs-as-profits-hit-by-inflation-cautious-shoppers.html "H&M to cut costs as profits hit by inflation, cautious shoppers") by closing some locations by the end of the calendar year. CREs are in a unique position here to access the data required to make an informed strategic [business](https://www.financedigest.com/how-to-start-a-business-in-louisiana.html) decision. Data can be filtered to identify which leases would be suitable for termination. For example, embedded in Horizon’s [business intelligence](https://www.financedigest.com/social-business-intelligence-market-to-reach-a-valuation-of-us29-bn.html "Social Business Intelligence Market to reach a valuation of US Bn") views are ‘gadgets’ – these are graphs and charts that represent all of the data. Assets can be ranked in order of profitability, achieved by underlying data comparing two things – in this [case the sales](https://www.financedigest.com/demand-from-retail-food-and-beverages-sector-to-account-for-over-70-of-refrigerated-display-cases-sales-study.html "Demand from Retail Food and Beverages Sector to Account for over 70% of Refrigerated Display Cases Sales: Study") data compared against the rental value of each asset. The results can then be filtered by date of lease termination. From what is left, the least [profitable assets can be identified and recommended to the CEO](https://www.financedigest.com/russias-largest-lender-sberbank-on-track-to-profitability-says-ceo.html "Russia’s largest lender Sberbank on track to profitability, says CEO") for termination. **Smart expansion** On the flip side of this, the organisation has had a successful [year and is looking to expand its commercial portfolio by opening a new office in central London](https://www.financedigest.com/london-takes-aim-at-new-york-with-five-year-financial-plan.html "London takes aim at New York with five-year financial plan"), in line with growth targets. This is when internal benchmarking analysis really comes into play. At the CRE [department’s](https://www.financedigest.com/will-time-derail-fiduciary-delays-arrival.html) fingertips is a vast [source of data](https://www.financedigest.com/exclusive-tiktok-nears-deal-with-oracle-to-store-its-data-sources.html "Exclusive-TikTok nears deal with Oracle to store its data-sources") for the London area. Standard reports written in industry standard Microsoft SSRSsoftware can detail [historical trends](https://www.financedigest.com/acetylated-distarch-phosphate-market-comprehensive-shares-historical-trends-and-forecast-by-2027.html "Acetylated Distarch Phosphate Market Comprehensive Shares, Historical Trends and Forecast By 2027") over a certain period, average cost per area or property type and so on, which can be scrutinised to make future projections. A [report can detail](https://www.financedigest.com/chromoendoscopy-agents-market-2031-report-details-the-future-development-manufacturers-trends-share-size-and-forecast.html "Chromoendoscopy Agents Market 2031 Report Details the Future Development, Manufacturers, Trends, Share, Size and Forecast") how much the company is paying on average per asset class, whether it’s retail, office or mixed use. These reports can also take into account the [impact acquiring a new workplace](https://www.financedigest.com/the-power-and-impact-of-effective-conversations-in-the-workplace.html "The Power and Impact Of Effective Conversations in the Workplace") would have on the workforce due to elements such as relocation costs. Utilising the [real estate data to inform and support the corporate objectives to invest](https://www.financedigest.com/investing-in-real-estate-how-to-generate-passive-income.html "Investing in Real Estate: How to generate passive income") in new locations, such data can be leveraged when negotiating new leases on behalf of the company. In situations such as this, it’s vital for the CRE to collaborate with other business units, such as group [finance to ensure that the best terms are met for the business](https://www.financedigest.com/is-it-risky-to-use-bridging-finance-for-my-business.html "Is it risky to use bridging finance for my business?") as a whole. [**Cutting costs**](https://www.financedigest.com/volvo-cars-to-axe-1300-jobs-as-it-steps-up-cost-cuts.html "Volvo Cars to axe 1,300 jobs as it steps up cost cuts") No longer solely responsible for buying and terminating leases, an integral part of the CRE’s role is monitoring the performance of assets in the portfolio. This is all the more important if the asset is particularly expensive to maintain. Data on each asset can identify the top ten properties that have the highest non-lease costs, such as insurance, [energy and utility bills](https://www.financedigest.com/uk-government-to-cap-energy-bills-for-businesses-bloomberg.html "UK government to cap energy bills for businesses – Bloomberg"). This can be filtered by location or lease length. Utility costs can be examined alongside the [energy efficiency](https://www.financedigest.com/demand-for-energy-efficient-and-advanced-fairway-mowers-to-be-witnessed-across-europe.html "Demand for Energy-efficient and Advanced Fairway Mowers to Be Witnessed across Europe") of the property – potentially influencing company strategy by informing on what grade of property serves best from an efficiency perspective. For all these scenarios, the data can be presented to the C-suite in formats that are simplistic and easy to digest. Horizon’s [reporting structure](https://www.financedigest.com/food-thermos-market-2021-industry-size-growth-trends-segments-and-cost-structure-analysis-research-report-2029.html "Food Thermos Market 2021 Industry Size, Growth, Trends, Segments, And Cost Structure Analysis Research Report 2029") is entirely flexible and can be tailored according to the user. So for example, a CFO might need to see the data laid out in a way that is different to the interface used by the [property management](https://www.financedigest.com/how-to-get-started-in-the-world-of-property-management.html "How to Get Started in the World of Property Management") team. The CFO will want statistics, such as total revenue, but may not be interested in the nitty gritty of utility bills. All of this can be chopped and changed to suit the user and the scenario. **What next for the CRE?** We’ve established that actively [managing assets](https://www.financedigest.com/guide-to-choosing-a-digital-asset-management-system.html "Guide to Choosing a Digital Asset Management System"), facilities and workplaces will reap the business benefits. The next game changer for the CRE is the new lease accounting standard, IFRS 16, which some are claiming will prompt a re-evaluation of real [estate](https://www.financedigest.com/pros-cons-of-investing-in-hard-money-real-estate.html "Pros & Cons of Investing in Hard Money Real Estate") strategy and increase focus on real estate in general. We’re anticipating that the the C-suite will consequently review their CRE strategy to [align with broader corporate](https://www.financedigest.com/becoming-data-ready-for-mtd-for-corporation-tax-aligning-vat-and-ct.html "Becoming data-ready for MTD for Corporation Tax: aligning VAT and CT") objectives. For the CFO, IFRS 16 will directly impact almost all common financial metrics as all leased assets are brought onto the balance sheet.Additionally, the strain of [recording significantly more assets may have tax](https://www.financedigest.com/irish-corporate-tax-boom-breaks-more-records-in-november.html "Irish corporate tax boom breaks more records in November") implications that the CFO will have to consider. So perhaps now, more than ever, open channels of communication between the CRE, CFO and C-suite at large has never been more relevant. As the role of the CRE [department](https://www.financedigest.com/will-time-derail-fiduciary-delays-arrival.html) has undeniably matured, thanks largely in [part to technology](https://www.financedigest.com/automotive-exterior-trim-parts-market-size-industry-report-analysis-growth-future-trends-top-manufacturers-and-technology-toyota-boshoku-corporation-plastic-omnium-cie-automotive.html "Automotive Exterior Trim Parts Market Size, Industry Report Analysis, Growth, Future Trends, Top Manufacturers And Technology| TOYOTA BOSHOKU CORPORATION, Plastic Omnium, CIE Automotive"), CREs have upgraded from fragmented excel spreadsheets to centralised data management. A data-centric approach with sophisticated [analysis needs](https://www.financedigest.com/analysis-global-climate-coalitions-need-safer-harbour-from-antitrust-turbulence.html "Analysis-Global climate coalitions need safer harbour from antitrust turbulence") to be embraced, with CRE real estate continuing to hold pride of place at the top of any organisation’s balance sheet. It simply makes good business sense. And with the increasingly digital nature of work, as well as IFRS 16 on the horizon, CRE executives can feel empowered by the fact that not only are their insights indispensable, they can directly [impact positive change](https://www.financedigest.com/ngunu-tiny-discusses-how-covid-19-has-changed-the-future-of-impact-investment.html "N’Gunu Tiny discusses how COVID-19 has changed the future of impact investment") within an organisation. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---