The Case for Consolidation: Collecting Rent and Other Monthly Real Estate Payments from Disparate Channels is Inefficient & Costly

Introduction

Rent checks dropped off with the doorman. Lease payments sent to the office. HOA fees mailed to the lockbox. Mobile payments electronically wired to the bank. Over time, property management owners and firms have amassed a plethora of ways for tenants to pay their rent and other monthly fees like utilities, HOAs, and special assessments. While responding to the demands of tenants is critical for any service business like property management, CFOs and Controllers are left with a mosaic of systems and inherent inefficiencies.

Receivables processing has traditionally been a complex and time-intensive function that create disparate information silos. Internal and external systems are not integrated, creating employee inefficiency, manual errors, and delayed cash flow. However, innovative companies are pushing the (check) envelope to create integrated payment processing that bridge the gap across payment channels. Regardless of whether the payment originated as an online banking bill payment or a simple check, the most innovative real estate payment companies are able to accept all payment forms and return consolidated and insightful information back to the Controller.

The Challenge

Property Managers receive payments in a variety of forms, ranging from paper checks to electronic transactions such as ACH, credit cards, and wire transfers. Remittances may be mailed to a lockbox, originated from a mobile device, made in person, or called into the Property Manager’s office. Every month, this mixture of accounts receivables creates operational inefficiencies that affect the entire firm:

• Manual procedures: Accounts Receivables (AR) Managers are saddled with processes to open, log, and deposit payments differently for a check mailed to the office versus a bank wire, wasting an inordinate amount of AR staff time that could be devoted to more value-added activities.
• Fragmented view: It is nearly impossible to accurately track and monitor payments arriving from disparate sources like various banks and lockboxes – without a bird’s eye view of each channel, data analysis becomes difficult.
• Weak ability to enforce late fees: Checks sent to the office are logged and deposited without strict adherence to timing, creating difficulty for enforcing to a late fee policy.
• Delay from online banking bill payments: Payments make through a tenant’s bank account generates the creation of a bank check and takes a week to arrive, delaying cash flow.
• Non-integrated electronic payments: Credit and debit card payments don’t often integrate with bank analysis or internal systems, furthering the already fragmented view.

At the end of the rent cycle, an AR team has spent hundreds of hours handling payments of all types and the Controller is left with little business intelligence.

Case Study

A top national Property Management firm grew tremendously through acquisitions. While efficiencies were realized in many parts of the business, the Controller’s department lacked synergies. Properties in one part of the country were on two accounting systems across five banks. Properties in another geography remained on a third accounting system with another set of bank networks and a third region only added to the complexity. Add on an electronic payment processor and the payment landscape was a patchwork mosaic. The Controller lacked visibility into all systems and could not easily analyze payments let alone find patterns and business insights.

The disparate payment channels caused many issues. The bank lockboxes were not designed for Real Estate payment intricacies, so most checks were rejected and sent back to their respective offices. AR Managers spent mornings sorting through rejected checks, decide where to apply the payment, and adjust the information in the accounting system before manually depositing the check at the bank. Multiplied across hundreds of thousands of units, the firm was reliant on manual processes that ate away at the AR team’s personnel and resources. Further, the firm could not leverage its size to negotiate lockbox pricing; its use of over a dozen of banks resulted in high costs to operate the lockboxes and other payment service providers.

Banks lack the strategy and technological solutions for utilizing their real estate data to improve internal processes, optimize payment processing, and provide valuable, actionable information. Individual payment processing partners can only view one piece of the puzzle, and cash flow delays run rampant due to lack of accurate receivables data. Only ClickPay, which arms real estate property managers and owners with a full suite of payment products, is able to consolidate accounts receivables data and create the resulting efficiencies.

ClickPay transformed the national Property Management firm from one with manual processes, multiple vendors per payment form, and disparate data into one that benefited from its size instead of suffered from it. Benefits the firm experienced from consolidation included accelerated cash flow, holistic reporting and analysis, automated posting, and reduction of manual processes and errors. The firm’s AR Manager estimates that since working with ClickPay, the department spends dozens of hours less a month researching checks and was able to reallocate AR teammates to more valuable roles. The Controller is now able to more judiciously manage the AR department because he can view all payments in a single consolidated dashboard, exposing actionable business insights.

The Solution

Industry experts define an integrated receivables solution as one that merges payment and remittance data for all payment types from multiple sources, including lockbox, into one integrated and commonly formatted payment file. ClickPay is that integrated receivables solution. ClickPay provides the only suite of products that consolidates and automates receivables for real estate management firms through all channels and then goes a step further to deliver the integrated payment data back to Property Managers. With a singular source of payment acceptance and processing, Controllers easily view all payments in real time, regardless of inbound payment channel. It is that frictionless payment experience for tenants and consolidated accounts receivables experience for Controllers that is driving innovation at ClickPay, solidifying its best-in-class standing.