Empires wax and wane. Apparently, the same is true in the kingdom of cash. In times past, cash handling was the best transaction. Who didn’t want cash in hand? However, with the advent of computerized monetary system, the world is continually moving towards a cashless economy. Vast improvements in the accessibility and security of credit cards, online payment systems, and banking transfers, has made cash more of a risk than an advantage—especially for many business owners. Is this true in the case of property management owners and managers?
Trend of the Cashless
Although we are years from a total cashless society, we are moving rapidly towards it. Nearly every country in the world is making strides to create cashless infrastructure for their economy. Debit and credit cards are now at the center of consumer culture. Payment systems like Apple Pay, PayPal, WePay, Square, Google Wallet, and hosts of others are endeared for their convenience, purchase protection, and payment safety. Furthermore, some consumers simply prefer their modern style.
What about the fees involved in electronic payment methods? As governments have begun to fully endorse electronic payments and multiple companies have arisen, the cost associated with electronic payments have dropped significantly.
Public and privately owned companies are embracing the changeover to digital transactions. Retailers all over the world are beginning to utilize tap and contactless payment mediums. The notion of “swiping” card is nearing its final days. Even in London, public buses no longer accept cash as a means of payment. The handwriting is on the wall: The old days of handling business in cash is slowly drying up.
Within the property management industry cash payments have become increasingly unpopular. Some of the reasons are shared with most businesses, yet others are unique to property managers. Read on to see why abandoning a cash rental payment arrangement can improve your security, accounting, and land you better tenants.
The physical risks involved with handling cash is obvious. However, when engaged in business, workers often forget about the dangers involved. Wherever cash is handled, there is a higher potential for crime. Furthermore, the risks increase dramatically when there is a particular time that a business is expected to have cash.
This presents significant problems for property management. Why? Two major reasons.
First, many managers and owners prefer to collect rent during a specific time of month. It lessens paperwork, bank deposits, and relieves the stress of remembering who owes what and when. Crooks understand this as well, which is why cash is the currency of crime. Accepting large sums of cash on a particular day can, leave your business susceptible to a planned robbery. Think about it. If a criminal observes several people bringing cash to your office, it could heighten their desire to relieve you of your rental payments.
Good risk management dictates that businesses identify and mitigate as many potential unfortunate events as possible. Consequently, accepting cash at a leasing office or personal home is understood as a high risk. When larger businesses ramp up their security, criminals often change their attacks to less venerable targets. Consequently, other businesses that opt to handle cash (or those who do by necessity) are forced to increase security measures. They use safes, secure cash counting areas, and invest in security lock/bars/reinforced doors/alarms. Obviously, these costs can drain profits.
Insightful business owners are questioning the cash system. Are the costs associated with handling cash worth the business? Many in the property management industry are reducing their risk management costs associated with security by altogether abandoning cash payment arrangements. Making your rental or leasing office a cash free (or minimal cash) site can boost your safety and help you to avoid expensive security measures.
Secondly, we live in an increasingly dangerous society. Even the best screening tactics can not prevent landlords from renting to tenants that may react violently in trying circumstances. For instance, on May 23, 2013 in Hialeah, Florida a tenant violently attacked his landlord. The tenant knew where the landlord lived and confronted him. The incident ended in the landlord shooting the tenant in defense of his life. Most likely, this could have been avoided if there was no physical cash exchanges required for the rent to be paid. The tenant would have never known where the landlord lived.
Improved Accounting & Time Management
In general terms, businesses that have large deposits can offset any costs related to digital transactions because they save time and accounting labor. Most property management firms and owners have to keep excellent accounting records. Hours upon hours of labor are utilized to update, maintain, and correct business accounting cash (and other manual styled payments, ie. checks, money orders, etc.) is accepted. Accepting cash payments also necessitates giving the resident a receipt and logging the transaction. No matter what accounting method you use, human error can occur. However, if cash is involved there is no recourse if a dispute arises for either party. Such a situation could end up in legal actions that can cost you valuable time and energy even if you win.
Another downside of accepting cash involves taxes. In some countries, random audits can cause property managers much stress, especially if there is a significant amount of cash to account for. Since cash can arise from anywhere, it will be thoroughly checked by an auditor. Should any problems arise with your figures, your business could be looking at some major problems.
What if you or an employee misplace the cash? Or what if a long-time tenant claims to have dropped the cash off, but it is unaccounted for? Cash getting lost could cause a good relationship to turn sour in an instant. How much easier would it be to simply use a non-cash payment system!
Getting a loan from a bank or financial institution is much easier when accounting records are in order. Typically, financial intuitions classify cash based payers with low-income earners. Showing a lender long records of electronic payments can add to their confidence in your ability to pay back the loan. Electronic payments show that your company is involved in business with individuals who are more stable than cash based payers.
Time management is vastly improved with the use of a cashless system. There is no need for the property manager to be tied down to an office or to have staff on hand to receive payments. Any manager or staff member that has had to wait around for a tenant that is running late to make a rental payment understands how precious time can be. Mangers and staff often have a variety of other matters that they can be attending to. When digital payments are used in conjunction with accounting software, often the updates are automatic, require much less manual attention, and can even notify specific parties that the payment has been made.
On occasion, there are honest tenants that simply prefer to make cash transactions (usually they are senior citizens). However, in most cases there is a reason why they want to handle their affairs in cash only. Shady pasts and illegal activities are often associated with cash only tenants. More frequently, cash rent payments also exposes potential tenants that may have a tendency to be late paying rent.
Typically, those who can make an online payment have bank accounts and keep a decent balance in their accounts. This alone shows some stability in their ability to satisfy basic banking requirements. Often those that deal in cash have something hindering them from conducting business electronically; essentially signaling a red alarm for landlords.
Conversely, many tenants feel uneasy about paying cash, particularly in large amounts and keeping large sums of cash on one’s person is general regarded as a safety hazard. Additionally, shelling out significant rental payments and receiving a generic receipt is unsettling to some. It can also put a property manager or owner in a tight spot if a legal situation arises because cash is very hard to trace. Digital payments create non-disputable paper trials that can be acquired by the tenant and landlord. A good paper trail of business makes for better tenant and better landlord relations.
With this in mind, property owners can use a non-cash payment policy as a simple form of weeding out bad paying tenants.
Getting Out of the Cash Rent Payments Game
Property managers and owners are wising up to dealing in cash with their tenants. What if you have tenants that are used to paying cash already? Is cutting them off the cash system immediately the best protocol? Likely not. Doing so could send a bad message to tenants that would be willing to comply with a change to digital payments. The better approach is to educate your tenants on the benefits of using a digital transaction and reward them for it.
Tenant Benefits of Digital Transactions
Most tenants are used to paying their utilities via a debit or credit card. By letting them know that your business is going to conduct payments the same way, you can avert any fears they may have. Let them know that they will have a sound record of any electronic payments, which is better than a two party receipt. Their bank or financial intuition will make a record of the transaction. Many property managers send a letter or email hat serves as another confirmation of payment. Additionally, such payments can be made anytime and from the safety of a home computer or cell phone.
Rewarding Tenants that Pay Digitally
Some landlords reward tenants that consistently pay on-time with an electronic payment. Rewards have included gift cards, gift baskets, or even percentages of a rental month of their choice. Showing appreciation for tenants who apply by your non-cash policy will be spread around and entice others to make the change.
Another alternative to consider is an E-Payment system. Unfortunately, there have been cases where thieves and even employee fraud has caused good tenants to be put in a bad light. Rent payment checks stolen from drop boxes and employee fraud are small crimes behind the scenes at apartments that add up to big headaches for property managers. Thieves have discovered novel ways to break into night deposit boxes. One payment expert stated how some criminals have utilized static cleaners to carefully lift out checks, money orders, and even envelopes that have cash.
There have been occurrences of paying inhabitants, being wrongly focused for expulsion, as an aftereffect of swiped rent checks. Likewise, an occasion of a site worker, accused of controlling the books to occupy countless dollars in cash requests into an individual financial balance. A property administration organization horrendously understanding that throughout the most recent decade, a part of the staff stole enough cash to purchase another Porsche.
A hot ticket thing for hoodlums is cash requests, which, not at all like checks, are seen to be comparable to money. They are the ideal imprint for inside and outside employments without the likelihood of deficient trusts.
As a rule, the unlawful acts are inevitably tackled, however not before lofts and inhabitants persevere through a ton of desolation, anguish – and lawyer’s charges. The result can be a far more prominent misfortune than the face estimation of the cash request.
“It’s more than cash requests,” Ford said. “It’s the capacity for extortion and control of records. Individuals who have admittance to those cash requests can make it look like installments are generally made and credits are consistently issued.”
Secure installment frameworks, electronic cash requests hinder misrepresentation, burglary passage said flats ought to think in regards to engaging a secured, electronic installment framework to keep up genuineness, as well as give true serenity to inhabitants. Frameworks today incorporate with property administration programming and installment sources that minimize the danger for burglary and misrepresentation.
Electronic cash request installment frameworks empower occupants who don’t utilize ledgers or Mastercards to pay rent by means of money exchanges, outside the occupant gateway or far from the front office.
Through coordinated frameworks, money installment of costs can be executed at any of the thousand endorsed retail stores and safely credited to the condo group. It’s a one-stop look for occupants and an approach to dispose of worker burglary for lofts, Ford says.
“Presently they don’t need to go purchase a cash request, return and drop it off at the workplace amid business hours or in that drop box/dark opening,” said Jeff Jaussi, Realpage Director of Payments Product Management. “They can go to one spot, likely the same spot where they are doing their shopping for food, and make that installment.”
Electronic cash requests offer focal points for holders, supervisors and inhabitants Jaussi and Ford say incorporated occupant electronic cash request installments offer a few preferences for property managers and administrators:
1) Convenience and Security for Residents – Residents can pay their rent electronically and safely through an assigned retailer. Exchanges additionally can be made well after the renting office closes without the need to drop an installment into that drop box. Likewise, taking out numerous exchanges as a result of points of confinement on cash request sums won’t be an issue.
2) Help Properties Eliminate Internal Fraud – Routing numbers, record numbers and individual data on checks open the entryway for wholesale fraud. “All that data can be stolen and utilized for fraud,” Ford said. “An electronic installment framework is a much more secure option to dropping off all that individual data.” Such data is secured by means of electronic installment and is not subject to being appropriated by a layer peg and bit of gum.
3) Process Efficiencies – The paper trail at the site office goes away, and the capacity for workers to physically control a record book or even a machine record keeping framework.
4) Integration in Property Management Software – Though most electronic installment frameworks will interface with your property administration framework just some are intended to incorporate completely into a property administration framework. The contrast in the middle of interface and reconciliation permits the installments framework to acknowledge installments every any business leads and conditions set up in the framework.
5) Cash Payment Validation – Payments at remote areas far from the renting office or inhabitant entrance are handled as though they were gotten on location. The operators do not acknowledge installment if the proper conditions are not met.
6) Real-Time Posting to Resident Ledger – Once the inhabitant buys an electronic cash request, the installment is instantly presented on the occupant’s record, continuously.
Electronic cash requests help wipe out cash request misrepresentation and give the occupant a protected, advantageous, and financially savvy strategy for making installments to the group.
As described, there are various reasons why a property management company would need to consider leaving a cash system. All of them are connected to the progress that world markets and economies are making to ensure a more secure, convenient, and efficient monetary system. It would be advantageous for property managers to stay in stride with modern advancements; especially when it involves money.