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Whether you’re an active property manager or paying someone to handle your rental property management duties, you’re spending time and money juggling a myriad of maintenance, property management and tenants. Only one of them is the collection and accounting of rent payments.
o Issuance of rental billing and/or prompt payment reminders
o Late payment reminders and action items
o Receipt of paper checks and accounting of the lessee’s own credit
o Preparation of records of deposits and bank trips to make deposits
In an article titled Businesses Embrace Online Payments to Improve Cash Flow and Save Time and Money, WorkZ, a support site for small businesses, cites a Gartner research study on the costs of manual payment processing. The study indicated a cost of $2 to $5 to send a paper invoice and $10 to process a paper check. These numbers are related to successful billing and on-time payment. As landlords and property managers, we regularly experience late rent payments, with the associated costs of reminders and actions to get the tenant to comply.
A real-world example of property management was described in the WorkZ article, beginning with this statement from the company involved: “Andrew Bloch, CFO and Alan Cusson, IT Manager at The Hamilton Company, Boston, Massachusetts, a large Property Management, stated “we have been looking for a solution where we could send a statement to our many tenants via email or fax and allow our tenant to be able to make payments over the internet. Our company processes a significant number of transactions each month and it is very expensive to send account statements. The problem with paper checks is that it takes a lot of time and money to handle them,”
Of course, there is the possibility of accepting credit cards. However, the costs involved will make a significant dent in profitability. With the various fees involved in accepting cards, costs can be 2% to 4% of rentals. These fees are saved by direct debit into the tenant’s bank account, and immediate deposit into the property management account. The electronic rent collection services offered by Buildium make this happen, and at a very low cost per transaction. There are no credit card processing fees, and the cost of processing a paper check is reduced by more than 80%.
By using an online rent payment system, the tenant also gets some advantages:
o Ability to track your rental account history online
o They can pay from anywhere, even on vacation or away on business
o Shipping costs and travel to the post office or mailbox are saved
o It is convenient in a very busy world
Property owners and managers save time and money by avoiding those trips to the bank to make deposits. Our cash flow improves as funds are deposited into our account immediately.