Collecting rent payments, managing arrears, processing disbursements and paying the landlord should be an effortless streamlined process that is safe and trouble free.
I sat watching a competitors webinar on ‘payments’ management the other day, and I honestly didn’t know whether to laugh or cry.
The Property Manager was expected to physically scan the daily bank rec and look for unallocated payments, and then manually reconcile all of them – like seriously? this would be a painful task with 200 managements, but with 2,000 or more I doubt that it would even be possible.
But it got worse...
Once the payments had been collected they were just dumped into a trust account that not only did the Property Manager have to reconcile and manage, but they also had to manually manage and process all the disbursements – basically half the job or more had been left unfinished.
There was another recent competitor promo that proudly proclaimed that it paid the full funds (after your fees) into a Landlord ‘wallet’ – the landlord was then expected to manage the payments into their various accounts, and if funds were required for disbursements they had to be clawed back from the landlord, then paid out. It would be hard to make it more complex and difficult if you tried.
The landlord ‘wallet’ concept has been taken up by several platforms as a work around to try and circumvent the regulators. As an unlicensed participant using an unregulated account for settlements, they’re simply not legally able to ‘hold’ funds for disbursements. As a result, the only way to try and manage the process is to artificially create ‘wallets’ to deposit landlord funds into that allow funds to be clawed back when required.
But there are a few potential issues with ‘wallets’. Firstly, given that the landlord(s) have access to shift funds whenever desired from the wallet there is no certainty at all that funds will be there when required for disbursements. The next issue was flagged above in that the landlord has to go into the wallet and manually disburse funds as he needs to (a mortgage account or to multiple people possibly), then finally you have the question as to whether or not a ‘wallet’ even satisfies the existing regulations.
As an example, the Queensland legislation is very clear that anyone who collects rental for a 3rd party must be licensed, and the funds collected must then be deposited into a regulated trust account. Given all the new fintech enabled payment gateways need to settle funds before they can be disbursed, it’s hard to see how a platform can be compliant in QLD without settling via a regulated account. So there are questions of compliance as well as operational efficiency to be addressed.
But getting back to the main topic being reviewed here; automation, the intelligent use of artificial intelligence, and smart application of cutting edge fintech can all but eliminate routine tasks in the collections and disbursement of funds.
Collecting rent payments, managing arrears, processing disbursements and paying the landlord should be an effortless streamlined process that is safe and trouble free.
Automation not only takes away the need for highly skilled people to spend the majority of their day doing mundane jobs, but it also eliminates the possibility of human error, so you get a more efficient business and a much better customer experience.
As an added bonus you also greatly reduce the possibility of internal fraud. Provided that you’re settling through a regulated account you also provide your clients with the full benefit of the fidelity guarantee, and as an office you no longer have the underlying risk of this.
Every property management business should now be looking at how best to do away with the need for them to have internal trust account management and to execute all the manual process associated with that. If you don’t find a solution to this then you’ll soon find you’re not competitive in the market.
In the very near future the leading platforms like Our.Property will be able to pull rental payments and disburse them in real time and 24/7 – that is pretty exciting news for most landlords and their property managers. You take back full control and you’re able to transact (collect and disperse) in real time every minute of every day.
Most platforms out there today have a simple rent collection process (that is done by a 3rd party) bolted on to their cloud-based management product that has very shallow workflows. Some of these platforms then use landlord wallets that allows them to also do a version of disbursements.
For real automation you need a fully integrated platform that has deep workflows starting with the execution of the Management Agreement and flowing through the entire onboarding process from advertising, enquiry, viewings, tenant application and vetting, through to lease preparation, signing and filing.
From here you need an automated process to collect and disperse the rent, manage arrears, handle maintenance, inspections, and finally the full exit process.
All these steps should require the management of the flagged exceptions only – high quality management and client relationship building rather than task-based grunt work that a machine can be efficiently doing.
Here’s a list of 5 questions we think you should ask before you decide what platform is best for you.
Does the platform I’m looking at;
- Provide real automation? (or does it expect me to manually check everything).
- Integrate fully with my arrears, maintenance, entry and exit processes.
- Collect and disperse all funds?
- Settle into a regulated trust account?
- Give my landlords the protection of the Fidelity Fund?
A ‘no’ to any of these questions should probably be a deal breaker for you.
