Multifamily’s Path to a Paperless Future
When asked, many operators will say they only accept digital payments and their communities are 100% paperless. However, after further exploration, we realize there are many exceptions, such as past resident payments, residents in eviction status, or even new move-ins, where many site team members will accept a paper payment. The fact is that nearly half of renters still pay by check or money order.
Ensuring a consistent revenue stream is fundamental for every business, but the manner in which funds are collected is just as crucial. Rent collection stands as the cornerstone of operations for multifamily communities, yet, for many, it is still one of the most outdated processes.
Over a decade ago, the industry saw the emergence of digital payment platforms, ushering in a new era of payment processing powered by credit cards and ACH money transfers. However, since then, there has been limited progress regarding the rent collections process.
Fortunately, today’s operators can lean on innovative solutions to finally achieve a truly paperless payments system. And further, incentivizing residents to use these platforms, through tactics such as resident rewards programs, ensures that adoption rates will hit a true 100%.
Current Collection Practices: Counterintuitive and Outdated
While an array of flaws exist with current rent collection practices, including a lack of payment options for renters, it’s the physical components causing the most grief. Logistical hurdles, such as processing paper checks and money orders via desktop scanners, consume valuable onsite staff time. On average, onsite staff spend 120 hours per year solely handling paper-based payments.
Moreover, checks cost organizations between $1-2 when received, and in many instances, they sit on the manager’s desk for multiple days before being deposited. These delays disrupt the cash flow, and when considering an entire portfolio, can potentially lead to missed interest accruement.
Although the drawbacks of traditional collection methods are evident, there are still some challenges stifling operators from making the switch and going 100% paperless.
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Challenges to Going Paperless
Despite the advancements made in many other operational practices, for some, a few challenges remain in the quest towards completely paperless rent payments. There are operators that are still apprehensive about technology, citing concerns regarding the perceived costs, complexities of adopting tech-based solutions, and the integration between existing systems and new solutions. However, the largest hurdle is getting operators to overcome the fear of change management.
While there is a perception that residents might have a similar hesitation to change, consumers have proven time and time again that they actually prefer to pay digitally. Just ask a Millennial or Gen Zer where they keep their checkbook!
A Proven Solution: Digital Payment Platforms
The remedy to overcome challenges associated with going 100% paperless lies in the implementation of a digital payment platform that seamlessly integrates with current property management software systems. These platforms take a centralized approach to encouraging residents to pay rent online by offering multiple digital payment options backed with fraud prevention features and tailored to meet the diverse needs of today’s renters.
With choices such as mobile check scan feature, residents can conveniently and confidently make digital payments with ease, even past residents and new move-ins.
Providing residents various secure payment options is just one part of getting them to consider making the leap from paper-based to digital payments. Operators are finding that by also offering resident rewards, the transition to wide-spread digital payments can be expedited.
Incentivizing Digital Payments
Aside from providing residents an array of convenient payment options, the most effective strategy for incentivizing residents to make their monthly rent payments digitally is by implementing a rewards program. A points-based cash-back resident rewards program further motivates renters to take advantage of digital payments.
As long as residents use the digital payment platform to make their monthly payments, they can earn rewards for positive renter behavior, including early or on-time digital payments.
The combination of digital payment technology and a resident rewards program equates to a powerful synergy. By itself, either initiative is still sure to drive digital adoption, but by offering them through one centralized platform, operators are leading the charge to a truly paperless future for the multifamily sector.
A Paperless Future
The digital transformation is underway and rewards programs are amplifying the shift. Although the path towards achieving total adoption of digital payments has its hurdles, it is also ripe with opportunities. By tapping into the power of a digital payment platform, operators can inspire secure paperless rent payments and reach new levels of efficiency and satisfaction, which leads to steady cash flow and increased NOI.
Source: Multifamily Insiders
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