Having trouble getting your tenants to pay rent on time? Our blog gives you the lowdown on effective strategies to improve your rent payment performance.
Most PBSAs create an all-in-one bill for tenancy agreements. This includes rent payments, deposits, and other fees split across three instalments. That's a big chunk of change across each room, unit, and location that affects your property management's cash flow. So, how do you make sure tenants pay their bills on time?
In this post, we want to give you the secrets we tell our clients!
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The simplest way to ensure your clients can pay each bill on time and efficiently is to encourage Direct Debit payments as the standard. Direct Debits can be set to a choice of monthly or instalment schedules, allowing tenants to pay quickly and in a way that suits their pocket.
Our friends over at GoCardless have several clients who have reduced their average payment period by an average of 20 days by switching to Direct Debit with their system. They also managed to save 3% of costs in card processing fees!
Here's our guide to GoCardless integrated with Xero, which is well worth a read.
There are other systems of payment that will allow parents and PBSA tenants to pay their rent without having to pay in foreign currency. You have four options:
Let's imagine you are all set up with Direct Debits and global payments; what else can you do to encourage prompt tenant payments?
In addition to your automated credit control reminders for 1st, 2nd and 3rd instalments, the following is a helpful list of considerations for making payments quick and easy.
To ensure a smooth and stress-free leasing experience, it is essential to establish transparent lease terms that clearly outline all the agreement details. This includes specifying the rent payment dates, the amount of rent due, any penalties for late payment, the first instalment conditions and any other important T&Cs. You will find that creating that clarity improves your percentage of rent payments made on time.
Quicker payments are made easy when you provide convenience, so automate your payment systems so students can pay rent online. Automated payment systems can be integrated into various platforms, such as mobile apps, websites, and point-of-sale systems, making it easier for tenants to complete transactions from anywhere at any time.
Ok, no one likes offering discounts, but the appeal of a discounted bill delivers a higher early payment average than you'd traditionally see. Having that early cash flow also helps you confirm your supply line, boost your cash flow and reduce the need for extra funding if you are a start-up or are expanding your portfolio.
Whether through your customer relationship management (CRM) system or an integrated engagement platform, you must create a workflow of personalised communications that help you keep in touch with every tenant. This enables you to build in payment reminders that don't get ignored. SMS or WhatsApp also receive higher engagement so using a platform like HubSpot which incorporates these tools should help.
Your tenant has a lot on, and remembering to pay their PBSA is sadly lower down on their list than you'd like. And it's most likely that your PBSA is their first home-away-from-home experience, so they need training on how to keep house. Create educational content that you can pepper into your workflows, delivering tenant communications that reset where rent payments should be on their priority list.
Make sure that your payment plans are genuinely flexible. Some students will need the flexibility to offer them a better rent rate; others might struggle financially. If that's the case, ensure you have a payment plan that takes the pressure off and keeps your tenant in situ. Some clients like Novel Student offer monthly plans, helping spread the costs for UK tenants.
The last thing you need is payment issues delaying cash flow. Create a proactive resolution workflow that proactively helps your tenant make their payment on time. This is especially important for the August payment prior to arrival. If they are late paying this is an indication that they may not turn up and you will have to start reselling the room.
It's important to schedule regular check-ins to assess students' ability to meet payment obligations. You can set up a simple workflow to send out reminders to tenants that their payment is due and follow up with them to ensure everything is on track. Additionally, it's important to flag any high-risk tenants for special attention in your CRM. Doing this lets you set tasks and workflows by monitoring their payment history and proactively addressing any issues.
To take a long-term approach to timely payments, you must encourage a community culture that promotes responsibility. To do this, you'll need to start by considering your messaging around finances and payments. Ensure your community feels open to talking money; this, in turn, will encourage openness and more responsible behaviour.
Implement clear and specific requirements into your rent payment policy to ensure added security in the deposit and guarantor process. For instance, you can establish a third-party guarantor service like Housing Hand who provide the guarantor service for a small monthly fee to the tenant. Similarly, you can define clear guidelines for guarantors, such as their credit score, income level, and relationship to the applicant. These requirements help minimise the default risk and protect you and the students involved.
If you find timely rent payments a struggle with your tenants, the best solution is a proactive approach, which starts by building a more responsible and engaged community.
Remember to prioritise clear communication, automation, personalisation, and flexibility in your payment systems, and remember to educate your tenants and encourage a culture of responsibility. Doing so can reduce payment delays, improve cash flow, and protect your business and its tenants.
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