In the modern world, convenience is everything. From placing a grocery delivery order to seeing a doctor virtually, consumers have come to expect services to be available at the touch of a button.
Fortunately, property management hasn’t been left behind during this tech evolution. One example is the rent payment and collection process, which technology has simplified for both renters and property managers.
Digital solutions now exist to replace the tedious managerial tasks of keeping track of multiple checks, cash payments, or money orders. And for the renter, switching to electronic payments removes the stress of waiting for a check to clear or the worry of forgetting to make a payment altogether.
Today’s successful digital solutions are “convenient, intuitive, and easy,” says Kyle Schweikert, the business analysis manager of property management software company Rent Manager. Modern rent payment services and software offer online resident portals and mobile apps with a variety of options for how residents can pay their rent, whether that’s automated clearing house (ACH) transactions, or payments by credit or debit card. Many programs give residents the flexibility of either making a one-time payment or setting up automated monthly payments. “The key is to make the rent payment process easy, and part of that is allowing payments to be made in whichever format is most convenient to the tenant,” Schweikert says. “Offering a variety of payment options empowers users to make consistent, on-time rent payments.”
Property managers who have offered multiple payment options agree that electronic payment is the clear preference for the majority of renters.
Kim Bender, CPM, executive vice president of property management for Fairfield Residential, which has a national portfolio of 43,000 multifamily units, has the numbers to show that online payments are preferred by Fairfield residents. “We have found that 88% of our residents who we profiled prefer to use the resident portal to pay monthly rent,” Bender says. “Of the 88% using the portal, on average, 74% of our residents pay rent using ACH payments, 8% use credit cards, and 6% utilize MoneyGrams.”
As the Fairfield resident app continues to advance with ease of use, it’s gaining more popularity, she says.
Kelly Tang, CPM, president of IEC Property Services based in Los Altos, California, has long used technology to streamline the rent-payment process for the 2,500 multifamily units in the company’s portfolio. The rent payment solution he currently uses is a mobile-friendly online portal, the same one that residents use for service requests. Through the portal, residents can choose their payment method—Tang says ACH payments are most common—and choose the date when they would like the payment to be made.
“Online payments are definitely preferred by tenants, whether they be ACH, online, or debit,” he says. “From the resident’s perspective, they want that payment to be cleared and not have to worry.” Tang and Bender agree that flexibility has to extend also to those residents who have no interest in adopting electronic payments.
“Our experience shows us that the demographic in our senior communities prefers to pay rent using a traditional paper check,” Bender says.
Adds Tang, “There’s always going to be the resident who likes to pay by check, and we totally respect that.”
While offering ease for residents, electronic payment options are equally beneficial for property managers, streamlining the rent collection process.
“Specifically, technology promoting online payments and online leasing has allowed for improved rent collection, improved reconciliation, and a significant improvement in efficiency for our on-site associates,” Bender says. “Without these types of technology, human error becomes problematic. With the assistance of technology, human errors can be removed, and we create an improved customer service experience for the resident.”
Tang says online payments remove the headaches of manual collections, such as roommates paying separately or multiple money orders. “We really push for digital payments for everyone’s sanity,” he says. “Most landlords see the value of waiving the ACH fee to encourage higher adoption.”
Online payment options also decrease delinquencies.
“You’re taking away an excuse for anyone who says, ‘But I slipped the check under the door,’” Tang says. “You can say, ‘I appreciate you tried to pay. Please request a stop payment, and here’s a link to where you can pay your rent.‘”
In an effort to increase timely payments, Schweikert added that some software, like Rent Manager’s, can automatically alert residents that rent is nearly due and help with the follow-up if a payment is missed.
“These notifications should be customized—both in content and delivery method—based on the property’s clientele,” he says. “It’s crucial to know whether emails, phone calls, text messages, or physical mail are the best means of contacting delinquent renters.”
Whether switching from paper to digital payments or upgrading to a new system, there will be a transition period. Tang’s company recently changed payment solution products, and residents are now in the process of being registered in the new system.
“There is always a reversion from online back to checks as everyone is getting signed up and registering with the new portal,” he says. “There is a little bit of pain, which I totally respect, but our goal is to get back to 75% of payments being sent online.”
Despite the adjustments, Tang says property managers should not be intimidated by the switch to a digital rent collection process.
“Changing payment processors is really not as complicated as it might sound,” he says. “Just think of the cost savings in terms of labor, like scanning checks—all those admin hours can now be focused on something that creates real value for the property.”
Schweikert says that, like many technologies, digital rent collection options have only increased in importance this past year.
“When COVID-19 hit, online payment adoption became absolutely essential,” Schweikert says. “Not only does it make operations more efficient and streamline receivable collections long term, but it also safeguards staff and tenants by inherently promoting social distancing. Even as we achieve higher levels of pre-pandemic normalcy, online payments aren’t going anywhere. The convenience is unmatched.”