Overview
A global restaurant chain, managing several thousand real estate properties across multiple continents, faced significant complexities in property management and revenue recognition. The portfolio included a mix of owned, leased, and sub-leased properties, each with unique financial requirements such as rent revenue, revenue sharing based on sales, and inflation-linked rent escalations. The challenge was compounded by the need for accurate revaluation of assets, automated depreciation, and sophisticated revenue accounting. To address these challenges, the company implemented the SAP RE-FX solution, enabling streamlined real estate management and automated financial processes.
INDUSTRY:
Retail
LOCATION:
Global
IMPACT:
Master Data Tracking | Automated Revenue Recognition | Simplified Revenue Accounting Automated | Enhanced Financial Accuracy
Challenges
The restaurant chain faced numerous challenges in managing its extensive real estate portfolio:
Diverse Property Types
The properties included a mix of owned, leased, and sub-leased real estate, each requiring distinct management strategies.
Complex Asset Revaluation
Regular revaluation of depreciated real estate assets was necessary to ensure accurate financial reporting.
Automated Depreciation and Amortization
The company needed a system capable of automatically calculating depreciation and amortization for a diverse range of assets.
Intricate Revenue Accounting
Revenue recognition had to account for various factors, including base rent, sales revenue percentages, and volume-based thresholds, requiring complex and automated accounting solutions.
Shared Expenses
Provisions had to be made for common expenses like parking, further complicating the revenue accounting process.
Goals and Objectives
The primary goals of the project were:
Implement a robust system for managing different property types (owned, leased, sub-leased).
Enable accurate and automatic depreciation, amortization, and revaluation of assets.
Streamline revenue recognition and accounting based on various business rules and contract terms.
Automate complex revenue accounting processes, including shared expenses and deferred revenue.
Solution
To address these challenges, the SAP RE-FX solution was selected and implemented, offering a comprehensive approach to real estate management:
1
Property Classification
The solution classified properties into owned, leased, and sub-leased categories, enabling tailored management strategies.
2
Master Data Configuration
Master data and business partner configurations were established to ensure accurate and streamlined data management across the portfolio.
3
Revenue Rules Configuration
Business rules for rental income and revenue sharing were defined, accommodating base rent, sales percentages, and volume-based thresholds.
4
Depreciation and Amortization Automation
Parameters for automated depreciation and amortization were configured, reducing manual effort and ensuring compliance.
5
Asset Revaluation
The solution enabled case-by-case revaluation of assets, ensuring up-to-date and accurate financial reporting.
6
Automatic Accounting
Revenue recognition rules were configured based on IFRS standards, with automated accounting processes set up to handle all aspects of revenue and expense management.
Project Delivery
The project was executed in several key phases:
Complexity Review and Needs Assessment
The company’s real estate management needs were thoroughly assessed, and complexities were identified.
Solution Design and Validation
The SAP RE-FX solution was designed to meet the unique needs of the business, with scenarios and processes defined and validated.
Implementation and Optimization
The solution was successfully implemented, leveraging SAP RE-FX to power real estate management processes. Continuous optimization ensured the system met evolving business needs.
Results and Impact
The implementation of SAP RE-FX delivered significant benefits:
Master Data Tracking
Real estate master data tracking was enabled for all property categories, improving visibility and control.
Automated Revenue Recognition
Revenue recognition was streamlined and automated based on contract terms and business rules.
Simplified Revenue Accounting
Automated processes handled complex revenue accounting, including shared expenses and deferred revenue.
Enhanced Financial Accuracy
Depreciation and amortization of assets were automated, and asset revaluation processes were improved, leading to accurate and timely financial reporting.
Conclusion
Through the implementation of SAP RE-FX, the global restaurant chain successfully transformed its real estate management operations. The solution addressed the complexities of managing a diverse property portfolio, automated critical financial processes, and ensured compliance with financial regulations. As a result, the company achieved greater operational efficiency, improved financial accuracy, and a more streamlined approach to managing its extensive real estate assets across multiple continents.
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