For most multifamily property managers, the community office is a madhouse during rent week, with leasing agents frantically keying in payment information between frequent trips to the bank.
Many now are beginning to ponder the true cost of collecting money. Efforts to automate rent payments and move check processing out of the community office have been gathering steam as electronic payment technology grows in sophistication.
Klingbeil Capital Management, which owns and manages approximately 6,000 units spanning 20 properties (about half of which are located in California), thought the time processing rent payments could be better spent.
Check processing in particular proved a tedious process. “We decided that we wanted our property staff to focus on customer service,” said Louise Santana, vice president of information technology at Klingbeil Capital Management. “And they’re not providing customer service when they’re at the bank.”
So about a year and a half ago, the company installed electronic payment software from Oakland, Calif.-based PropertyBridge, Inc. The technology allows a variety of payment options, from check scanning (which automatically converts checks into an electronic fund transfer) to debiting checking accounts; even Western Union wire transfers are accepted. The software integrates with property management software suites like Yardi’s Voyager, synchronizing rent payment information with back-end accounting systems.
A virtual queue
On-site credit card transactions also had their limitations. At one of Klingbeil’s apartment communities, the Waterford in Woodland Hills, Calif., credit card payments through the community office had reached critical mass. “The property manager would have a huge line out the door on rent day with people waiting to have their credit card processed,” said Santana. Now Klingbeil’s Web site features a page for each of its properties, allowing residents to charge their rent payments online either one month at a time or by setting up accounts that are automatically billed each month. This feature has been one of the most popular electronic payment options for the company’s tenants.
“At some properties, like the Waterford, 75 percent of the payments for rent, whether it’s credit card or checking-account debit, are made online,” said Santana.
That 75 percent represents a staggering success—the industry goal is usually around 40 percent penetration. But the figure also represents the company’s high-water mark. Santana has noticed that high-end properties, like the Waterford, where rents range from $1,375 to $2,200, tend to have higher rates of electronic payments.
The company heavily promoted electronic payment options in its fliers and literature when the technology was installed. “We made it part of our lease package, asking, ‘How would you like to have your payment made every month?’” Santana said. “We just made it part of the process.”
The student housing solution
It’s not just high-end apartment communities that benefit from this approach. Student housing, which makes up about 15 percent of Klingbeil’s portfolio, is a great fit for electronic payment technology.
A generation raised on the Internet primarily searches for apartments online. And the seasonal nature of student housing, with many tenants checking out and moving in at the same time every year, also makes electronic payments a good fit. “If we have a prospect that is in another state and they want to apply and send us a deposit, they can do that online, and we can confirm receipt right away,” said Santana.
What’s more, should a student’s parents need to pay their rent, as is often the case, the transaction can easily be done remotely via the web. “For student housing, online payments are an absolute requirement,” she said.
Electronic payment systems can also help with collections.
In the past, Klingbeil outsourced the function to a collection agency, “because we couldn’t keep up with it,” she said. The company now uses electronic payment technology to set up a payment plan when working on a collection account and is able to better manage the process.
“We can have them authorize us to debit their account for a certain amount every month, or week, or however frequently we need to get them up to date,” she said. “We would rather do that than report them to a credit agency.”
Speeding up cash flow
The rapidity of electronic payment processing is good for a company’s cash flow as well. If a tenant bounces a paper rent check, it might take several days for a property manager to find out.
“By the time you process that check and get notification back from your bank, a week’s time or more has passed,” said Jason Gardner, president of PropertyBridge.
And that first week of the month no longer turns on-site staff into key-punch specialists. “The property managers were happy about not having to do the data entry themselves,” Santana said. “Now they can focus on what they do best: leasing apartments.”