United Dominion Realty Trust

OpsBuyer™ Saves REIT More than $1 Million

Summary

United Dominion achieved an IRR of 655% by using OpsTechnology to manage and standardize its procurement, purchasing and payables functions.

Situation

United Dominion Really Trust (UDRT), the fourth largest apartment REIT in the US, owns and operates more than 75,000 apartment communities nationwide. The company has publicly committed itself to creating operating efficiencies to increase net operating income through economies of scale. UDRT needed a system to improve efficiencies, reduce costs and save money by better managing the relationships between its property personnel and their suppliers.

Solution

Dominion adopted OpsBuyer™ by OpsTechnology to manage its accounts-payable workflow. OpsBuyer allows UDRT to create and approve purchase orders, receive and process invoices, and track and manage purchases online.

According to David Houghton, VP of Purchasing and Corporate Services at UDRT, the company "couldn't physically pay its vendors in less than 20 days" under the old system in which they uploaded RentRoll data into PeopleSoft and mailed invoices to accounting to be verified. United Dominion now uploads OpsBuyer data and batch payments from all properties to a vendor and transmits one payment electronically to the vendor every few days. This process reduces payment time from 28 days to just 9 days. In addition to saving over at least 500 man-hours annually in accounts payable, UDRT is now able to take advantage of prompt payment-discounts by paying in less than 10 days from invoicing. In addition, electronic bill presentment, order placement and supplier payment requires data to be entered only once, leading to greater accuracy and a decrease in the overall error rate. The company's Chief Accounting Officer estimates that OpsBuyer saves 15 hours of community directors' time monthly, or 180 hours per site annually. This represents soft savings of about $4,300 per site - or $1,100,000 of company-wide soft benefit annually.

In addition to creating dramatic improvements in United Dominion's business processes, OpsBuyer has generated major savings by reducing "maverick spending" with non-contract or non-preferred suppliers. Other functions, such as spend analysis and improving contract pricing through product standardization, have generated an Internal Rate of Return (IRR) of 655% and savings of more than a million dollars.

Bottom-Line Results

As a result of using OpsTechnology, United Dominion has generated:

Internal Rate of Return (IRR) of 655%
Accounts Payable savings of $1.1 million
Annual cash savings of 2.65% of annual total spend on deliverables
Total steps from placement to payment reduced from 14 to one
Payment time cut from 28 days to 9 days
Invoice errors reduced from 12% to 0%
Payback period of less than three months