How Online Rent Payments Benefit Property Managers and Landlords

Posted by Re-Leased on 21st April 2022 -

With the Covid-19 pandemic accelerating many already growing trends, it’s predicted that paper billing will become obsolete by 2026.

Businesses will now, more than ever, be opting in for synchronised and streamlined practices for managing their payment process from start to finish as opposed to using traditional methods. 

This is particularly important when managing commercial real estate as the easier it is for tenants to pay you with online rent payments, the quicker they do. For property managers and landlords, you’re also significantly reducing the time spent reconciling invoices and chasing arrears. 

To offer customers a solution that keeps them ahead of the game and able to track payments coming into their business in real-time, we introduced Re-Leased Pay – a secure digital payment solution reducing administration time, at little to no cost to your business and that can be set up within minutes.

The growing need for online payment options

Upon joining Re-Leased four years ago, CFO Sam Caulton, knew the business needed to adopt an online integrated payment solution for our own customer transactions to cut down what was a very time-consuming process for customers and the internal finance team. 

After transitioning Re-Leased and our customers over to the new process across an 18-month period, Sam, and Re-Leased CEO, Tom Wallace, put a significant amount of research into how the commercial real estate industry was reacting to collecting payments, especially throughout the pandemic. They saw a great opportunity to offer a ‘lock and leave’ solution to help our customers reduce time spent manually controlling cash flow, and to allow them to get a better indication of when to expect money to be coming in from their tenants. 

We spoke with Sam about the Re-Leased Pay journey, the key outcomes, and the importance for the industry to get on board with digital payments.

Q. Why is it important for Commercial Real Estate professionals to adopt online rent payment solutions? 

SC: The real estate sector is still catching up and needs to cross that chasm and get into the cloud. Particularly with digital payment solutions. Ironically, rent is one of the oldest forms of subscription, and yet it is still collected by one of the oldest forms of payment methods. 

Currently, both from a tenancy and landlord side, you’re having to reconcile payments and chase those you haven’t received. Yet we live in a subscription economy. Almost everything we buy, every industry we deal with, we are making payments, more specifically recurring payments, through an integrated payment system. Take Netflix, your gym subscription, insurance repayments, and more – all being settled on a recurring basis. So functionally and fundamentally, real estate needed to be doing the same too. 

We knew that we had to be the catalyst for change for our customers in our industry, so introducing an integrated payment technology was an important step for us and our customer base. 

Q. What advice would you give Property Managers and Landlords who are looking to optimise and digitise their payment experiences for their tenants? 

SC: Don’t look at digitising your payment processes for your customers as a ‘rip and replace’ solution. For example, with Re-Leased Pay we have made it extremely simple to set up – it’ll take less than 10 minutes. It’s then up to you to encourage your tenants to adopt a secure way to settle their arrears and start making payments via Re-Leased Pay. 

Customers using Re-Leased Pay have observed that tenants are staying on top of their arrears, particularly those who are making use of the recurring payments feature where the rent amount will be automatically paid every time a rent invoice is generated and approved. 

MYOB ran a sample of two million MYOB invoices between August 2019 and July 2020, which found that invoices paid online were paid three times faster than those that did not offer an online payment option. So why wouldn’t you digitise your payments with that result?

Q. What have been the benefits that Re-Leased saw from introducing a payment solution for customers, and what benefits should customers expect Re-Leased Pay to bring? 

SC: There have been several clear gains from adopting our own solution, including how much it enhanced our business image and will do for you too. It’s a marketable benefit as you are demonstrating to your tenants that you are committed to offering more solutions. 

The most significant gain for us however was that we saw a reduction in DSO (days sales outstanding) from 55 to 29 days and counting. If 100% of our customers were on our integrated payment platform, we would have a DSO of 0%. During the early months of the pandemic, the average time between a small business issuing an invoice and when a customer paid said invoice grew across the UK, Australia and New Zealand. According to the Xero Pandemic Insights report, the increase was especially sharp in the UK, where it increased by an average of 6.4 days between February and May. Taking an average of 37.2 days for small businesses to receive payment for sales they had made. Considered best in class is between 30 and 36 days, as reported by the CFO magazine; even at 30 days this is a lot of time that landlords or property managers do not have cash in the bank. Our vision is that our customers adopting Re-Leased pay will see their DSO decrease to between 0 and 7 days. 

An integrated payment solution like Re-Leased Pay, is guaranteed to add a layer of predictability into your business, which significantly enhances the quality of your cashflow forecasting. Ultimately, if you go to your bank to get additional financing, you can tell them when and what is going to hit your account every month. 

Re-Leased also saved $10,000 per month in bank fees, and our team were freed up by at least two days per week, to work on other tasks as we reduced the number of payments we were chasing and the manual errors that occurred from time to time. We gained a lot more control and visibility over cash flow, which our customers will confidently see with Re-Leased Pay as you can distinguish when and how payments will be coming in. 

Q. Why did Re-Leased choose Stripe as the preferred payment solution? 

SC: We wanted to find a payment provider that would suit our customers across the globe. Stripe is used everywhere, it’s well-known, secure and has a developer-first approach that helps us to take our customers’ feedback into consideration and apply it to improve our solutions. 

The likes of Shopify, Amazon, Google and Salesforce all use Stripe because they’re the best in business. 

Q. Can you give us any insight into the future plans for Re-Leased and optimising payments? 

SC: Re-Leased Pay is in its infancy. We only just released it into the wild from beta towards the end of 2021, and it’s delivering great value to about 10% of our customer base who have adopted it so far. We’ve also introduced recurring rent payments and have further features coming on the roadmap to make the experience even better than it already is. But you can still do a lot more with payment technology and identifying signals through data so that’s what we’ll be looking at. 

In a 2019 Deloitte report, data found that 33% percent of mid-size businesses report payment processing time as a major issue. Payment delays can result from a delay in payment from suppliers/buyers or slow processing method. Therefore, when we look ahead at plans for Re-Leased Pay, it’s important to us that we enable Re-Leased to act as our customers complete payments hub, so that they’ve got everything all in the one place and can offer tenants a painless alternative to any other method. 

Re-Leased Pay will be the ultimate ‘lock and leave’ solution for customers, where you can go to sleep at night knowing that your business will be paid on time.

Find out more on how Re-Leased Pay can benefit you and your tenants.