No industries have been left unscathed by the massive adoption of digital payment technology and the global embracement of technology. With the rise of PropTech and PayTech, how property management payments are made is changing fast.
Throughout the pandemic, property management companies were determined to meet challenges head-on. Property managers increased reliance on digital communication and infrastructure to maintain operations. Now with an eye on the future, more and more property management companies are looking at how they can leverage PropTech in their operations and adapt to new ways property management payments are made.
This article covers what PropTech is, what’s driving the trends, and how paytech turns property management payment solutions into fewer costs and more profit.
PropTech (property technology) is the use of information technology in property management. The goals of PropTech include minimizing the cost and resources associated with real estate transactions, maximizing efficiency, saving time, and personalizing property management. Similar to how FinTech focuses on using technology in finance, PropTech uses digital innovation to address the needs of the property industry.
According to PwC, in 2016, real estate technology was a US$4.6 billion industry in Canada and the U.S. Three years later, that figure has almost doubled to US$7.3 billion, proof that the PropTech industry is blossoming.
Property managers looking to scale up and optimize their business operations in 2023 and beyond can expect to encounter many micro and macro trends that are likely to present various challenges. In fact, according to property management software company ManageCasa, there are 24 to watch for, and while these 6 caught our attention, the full list can be found here.
✅Focus on Tenants
✅Greater Demands from Owners
✅Startup Property Management Companies
Most notably, changes in the industry are taking place due to an uptick in industry apps, the demand for digital solutions in payments, and younger generations entering the market. With an income set to increase fivefold, hitting $33 trillion by 2030, Gen Z’ers are making businesses stand up and take notice. Property managers are looking for ways to stay ahead of the game to match this generation’s values.
• The industry went from high-touch to virtually no-touch
• Companies have moved their entire leasing and renewal processes online, creating a friction-free experience
• Property managers and real estate agents can answer questions via chat or get questions answered by bots
• Payments, rent collection, and onboarding have increasingly gone digital
• Sustainability stepped into the forefront
PropTech is changing the way things are done. The focus has shifted to customer service, personalization, and a fully digital experience as tenants demand more communication, better transparency, and a more fluid experience.
Canada continues to be a PropTech hub with a thriving technology ecosystem. After a pandemic-induced pullback in activity, renewed interest has returned to this asset class, given the accelerated adoption of technology in real estate and the keen desire to focus on solving problems through innovation. Whether its construction tech to unlock value or applications to help measure, track and reduce the carbon footprint, PropTech has a role to play.
Rank Magliocco, Real Estate Leader, PWC Canada
Landlords and property management companies have long known that meeting clients with their preferred payment option tends to be a win. It is for this reason that they accept a laundry list of payment solutions such as:
• Post-dated cheques
• Money orders
• Certified cheques
• Pre-authorized debit transaction
• Credit card
What should not be overlooked, however, is that most of these payment methods can often mean chasing up tenants to collect rent. Managing the administrative side caused by the onslaught of paper cheques, credit card expiry dates, and insufficient funds is quite common in the rental industry. Not only is this costly for landlords and property managers, but it is also the cause of major headaches for everyone involved.
Top 5 Property Management Payment Headaches
The less control you have over how payments are made, the more likely you are to encounter unexpected delays .
Has the payment been processed? Have funds been received? Is payment on the way. These unknowns play havoc with strategic decision-making.
The true costs behind failed payments far exceed the fees. That extra lag time hits property managers where it hurts the most.
Determining who’s paid and who hasn’t or what’s been paid for is a spreadsheet jigsaw mystery. Fitting the pieces together is like working with a 5000-word puzzle.
A time-intensive process of entering data, making corrections, and validating by hand and human. Document fraud, converting bank statements to different formats, and errors are simply three of the challenges faced.
For those managing multiple properties themselves, managing operations inefficiently can quickly turn into a situation where important things are neglected, leading to unhappy tenants.
With the correct PropTech digital solution in place, all operations can be streamlined. Financial reporting will be meticulous, and property maintenance will be dealt with on one platform. No additional Excel sheets or Google docs are required.
When this happens, scaling a business becomes easy as the PropTech solution enables and supports growth in the company.
Say goodbye to cash and cheque payments and hello to on-time payments. The time to move away from requiring and processing cheques is here. Did you know that 30% of Gen Z’ers have never written a cheque? With payment technology in place, property managers can verify available funds, facilitate instant rent collection and streamline the onboarding process.
Cash flow management and reconciliation become a much more fluid process by managing all payment-related operations from a single portal instead of many. The less time spent chasing payments and reconciling deposits—and the more time property managers can spend keeping tenants happy—landlords' return on investment rises.
Before automation, the process was archaic. When you consider how payment processing was done in the good ole days. We would send them a list, and someone would manually enter every payment into the system. Our supervisors would lose anywhere from two an hour and a half to four completing NSF reconciliations every Monday morning. It is hard to believe this is common practice in the industry.
CEO in the Lending Industry
With more time to focus on the business and a positive cash flow–scaling a business or even distributing funds to various departments becomes easier and more efficient.
Payments fuel every business, yet the existing way of managing payments and collections is outdated and inefficient. We fix that. As a recognized industry-leading payment technology provider, VoPay's Fintech-as-a-Service provides businesses with a scalable B2B payments platform. By embedding our payment processing services into your property management software solution, property management companies can connect to all major payment rails and configure the right payment experience that works for their customers. Ensuring complete transaction visibility, better cash flow management, and fewer NSFs.
Learn how streamlining money movement and eliminating payment inefficiencies can help you go to market faster and offer innovative financial solutions to your customers. Contact us today!