Paper checks are viewed as a necessary evil for property management companies. They’re expensive, time-consuming, and inconvenient, but they’re the preferred method of payment for many residents. However, with emerging technologies and digital payments, they don’t have to be.
Simply knowing that there’s an easier way to accept payments sometimes isn’t enough to make the switch. Today we’re going to focus on how this method of payment not only causes unnecessary inconveniences, but more importantly, creates excessive costs that could instead be invested in your business.
1). Paper coupons
If you accept paper checks, you likely spend money on coupon books to help identify these payments. Simply put, coupon books add up each year. Not only do you have to pay for the physical books, there are also costs associated with delivering the coupons to your residents. Here’s an example scenario:
- The average property management company has 100 communities
- The average community contains 220 residences
- The property management company charges dues on a quarterly basis requiring 88,000 coupons each year
- Coupon books cost around $3.99/coupon
- This PMC will spend $351,120 per year on coupons alone! This number does not include the costs associated with shipping the coupons to your residents.
2). Processing fees
Recall the saying, “you need to spend money to make money”? This holds true for paper check payments as every check you receive costs you money. Banks typically charge between $0.65 to $0.75 for each check they process. In the scenario above, if 100% of these residents paid via paper check, the property management company would be spending between $57,200 to $66,000 on check processing alone.
As you know, there are several issues that can arise with check payments, such as the exceptions list for payments that lack coupons. When your team receives an exceptions list from the bank, you must pay for the time your staff spends to reconcile these payments to ensure they’re applied to the proper residence. Beyond the exceptions list, you are also paying for the time it takes your staff to follow up with residents who:
- Didn’t pay the correct amount
- Had their checks bounce
- Missed their payment
4). Banking credits
When we mentioned bank processing fees, did you ignore that point because you have free banking? If so, you might still be losing out on money (say what?!). Property management companies are the ideal banking customer as they frequently deposit large sums of money and hold high balances. For that reason, banks incentivize these companies to bank with them by offering banking credits that can be used offset the fees associated with processing checks (because they know you will receive a large number of check payments). These credits make it appear as if you have free banking.
But what if you eliminated check payments, or more realistically, significantly cut down on the amount of checks you receive? Think about all the valuable services you’re currently paying for that these credits applied to, such as paying for your community management software.
Interested in learning more about how digital payments can help you save money on banking? Download your free copy of our whitepaper, What Every Property Management Company Needs to Know About Free Checking.