When I was working back in Princeton, New Jersey a few years ago for an investment company, I use to handle several property management companies. I remember when these projects were given to me; the former Controller was managing these accounts manually. Manually as in, tenants are paying by checks, so you have to physically deposit the checks and manually update the receivable accounts. Now, when you are handling several properties can you imagine how many people you need to manage your investment? A lot. I’m glad I was familiar with how the way merchant accounts work. That’s when I managed to turn the companies around by reducing administrative fees and not only introduced online payments but credit card processing that automatically feeds into the online billing system.
When I made a presentation to management about making it easier on the part of the tenants to pay promptly, they thought that the only way was to knock on their door a few days before the rent is due. That was never my idea. You see, internet at that time was growing and online bill payment was also being introduced and the only way to solve the over 120 days accounts in our receivable was to be creative. The creativity was actually easier because you only need to accept credit cards as payments and you should be on your way. Everyone is busy and we found out that these accounts are staying over the 120 days column on the receivable – not because the tenants cannot afford to pay, but because they find it a little bit weird and a waste of their time to run to the post office and mail their payments. Easy huh?
The whole idea was simply – make it easier on your tenants to pay. Accept credit cards. That solved the problem. Since then, we’ve managed to have our receivables current and we’ve never had any delinquencies.
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