Cash and paper checks are on the decline, however it's estimated that over 67% of residents still pay assessments using paper checks. Digital payments have experienced significant growth over the last several years, and this growth is expected to continue. Do you offer a secure digital method for residents to make payments? If you’re on the fence about this solution, here are the top five ways digital payments will create significant efficiencies for your business.
Reduction in Calls
A large percentage of calls management companies receive from residents are around payments. Did you get my payment? I sent my check on time, why did I get a late fee? Where should I send my check? These calls come in every single month and take up too much of your team’s time. Not to mention the in-person visits to drop off checks or ask about the status of their payment. By offering digital payments, your residents can make a payment in three simple clicks, and never have to wonder about whether or not you received the payment or if it was on-time.
Reduction in Late Payments
Speaking of late payments, digital payments can significantly reduce the number of late payments, as well as the labor intensive follow-up work required to manage them. Residents can choose to setup recurring payments, ensuring they never have to worry about remembering to make a payment on-time again. As for those who aren’t on recurring payments, they can receive reminders when due dates are getting close. While management companies do make revenue on late fees, it typically doesn’t make up for the headaches, time, and manual work that goes into managing and collecting these fees.
Faster Access to Cash
When residents make digital payments, this money is automatically deposited into your bank account and immediately reflected in your accounting platform. That means you can avoid the amount of time it takes to for checks to be deposited, processed, and cleared. This allows management companies to pay vendors and other bills earlier in the month, keeping the companies that serve you happy, as well as your residents.
Most association management companies run on less than a 10% profit margin. Digital payments are a simple method to help reduce overhead, thus increasing overall margins. By reducing the overall number of paper checks your company receives on a monthly basis, you’ll also reduce the number of phone calls coming into your business, the number of late payments, and the amount of time it takes to process payments. That means you could potentially eliminate certain roles within your business, such as a collections clerk, AR team member, or even front desk role who typically takes phone calls. All of this leads to a healthier, more valuable business.
With payment methods like checks and ACH Direct, there’s a degree of risk involved for management companies. For checks, you’re waiting to receive and deposit checks before you can make payments your vendors. For ACH Direct, it’s essentially a risk-based product, as management companies are required to go through an underwriting process that has the potential to get more stringent with each year. These risks are completely avoidable when residents make digital payments using credit, debit, or ACH.
Interested in learning about how “free” checking isn’t really free? Download our whitepaper today!