The concept of electronic rent payments is not new to property management. The first rents paid ‘on line’ (vs. via paper check), were processed in the late 1990’s, the Dark Ages for electronic transactions. What’s amazing is the amount of traction yet to be gained by providers of such services, in the area of acceptance by property managers and tenants.
If a property manager wants to make operations more efficient and cost-effective by offering electronic rent payment to tenants, now is the time. Services offered by vendors include rent payment only (whether using one or multiple methods) as well as modules for maintenance request logging and tracking (no more lost tickets!), two-way communication between managers and tenants (no more flyer’s on doorsteps or posted by elevators), direct interface with accounting systems, and ability by managers to access data remotely. The ability to have a custom-designed, white-labeled front end covering all the modules exists.
Confused by the choices? No reason to be, as eventually the chosen vendor’s platform should be what works for the tenants, management company, staff, and the local situation. Here are some expected considerations:
- Money will be saved due to quicker receipt of rent. Several vendors allow for next day credit of funds.
- Money will be saved due to the readily available audit trail—the best systems allow a manager to see what’s come in or pending, what’s overdue and can automatically transmit (or manually arrange reminders for) follow-up emails, snail mail, or phone calls. Individual transaction numbers will generate for each payment and should allow sorting by selected criteria (e.g. by property, date, payment size, tenant, etc.)
- Money will be saved due to the cost of paper, envelopes, postage and re-deployment of staff who formerly manually mailed statements and tracked receipts. Going green is also smart in this environment!
- Some vendors offer options that almost make it difficult to avoid paying rent electronically. Facebook messages, emails with links to the payment site, payments via text message, automatic deduction from a bank account.
- Look for secure payment options, where payments are tracked the moment the tenant hits ‘Send’–no more “I sent it-We didn’t get it”.
- Those in my own social networks who have commented on the topic have said that rent is the last recurring payment they don’t make electronically, a fact which tends to be annoying.
Once a provider is selected, expect to pay the vendor fees for monthly maintenance and per transaction. No consensus exists as to whether fees should be paid by the manager or tenant and this article won’t suggest which is preferable. Accountants (and the tenants’ association, if there is one) should be able to help decide. Transaction fees are nominal, at any rate. As for monthly fees (Software developers don’t work pro bono.), confirm what‘s provided (such as regularity and notification of updates) for the money. Fee levels shouldn’t necessarily be the deciding factor, especially if a productive, co-operative relationship with the vendor has developed, having the desired salutary effect on your operations.
Inquire about what vendors provide in terms of a service level agreement. What’s guaranteed in terms of performance, what their previous experience has been, what their DR contingencies are, and know what the property’s plans should the system be unavailable all need to be clearly outlined. By which properties is the software currently used? Request references and don’t rely solely on online reviews.
Ok, time for implementation of the new online payment system (and other modules, mentioned above, if chosen) has come. What’s next? Training, education, webinars, PR, for starters. Every property will have tenants who’ll seamlessly switch to e-payment. They are ready for it. The next group will be amenable to the idea but will need hand-holding. There’ll be a third group who are sticks-in-the-mud and, in addition to training, will need some incentive to switch to electronic rent payment.
Incentives could include an amount or percentage off the first month’s rent, free or reduced parking, drawing for a gift card. Creativity and persistence will be the best way to get the effort noticed. If a system is deployed and resident response is lagging, create a feedback loop so efforts to increase acceptance aren’t done in a vacuum.
Finally, once up and running, share experiences with the industry and be available to answer questions from peers. Realize that a property can be distinguished as forward thinking by providing a service which makes tenants’ lives easier and allows them to feel more connected with goings-on in the building, on the grounds, and in the neighborhood.
Charles H. Fiori, CFA is a business development and sales professional with 20+ years experience in the financial services and multifamily industries. He has written and spoken on topics such as electronic rent payment, sales, strategy, job hunting, and market data. Charles can be reached at email@example.com.
About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. For more information, visit: http://www.MultifamilyInsight.com
About This Blog Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. http://www.MultifamilyInsight.com