The real estate industry relies upon the regularity and consistency of tenancy payments to drive revenue. Property Management often forms the cash flow base for boutique and franchise shop fronts alike, and any disruption can adversely affect the bottom line quickly. As the domestic inflation rate continues to swell, in tandem with rising international prices for critical goods, commercial tenants present increasing credit risk. With lessee margins tightening, you need the most effective rent collection tools to avoid late or non-payment.
Managing late payments: a guide for real estates
While the glamour of the real estate industry resides in sales, the heartbeat of so many businesses within this sector lies within the Property Management department. The rent roll of an agency drives regular revenue within businesses that often witness periods of commission feast or famine as the market swings. The residential and commercial sales markets can be fickle, and your business relies upon the consistency of tenancy payments to ensure that staff get paid, and the lights stay on. Without this essential rental income, and rising overheads, the agency’s viability may be at risk.
Commercial tenants represent high-priority renters because they tend to occupy larger spaces for longer periods, netting a greater return per property than many residential tenants. They are, however, exposed to the same (or greater) rising costs of business operation that you are. In some industries especially, such as construction, insolvencies are on the rise to an alarming degree. Should such a business be a high-value tenant of yours, within a large commercial space, you must immediately ensure that all necessary due diligence is done to identify their risk of bad debt as soon as possible and prioritise collections.
While the solution for many is to engage debt collection agencies at the point of non-payment, that may prove to be too little too late. The commercial tenant may have already moved out and moved on. Without a formal automated collections process, you’re exposing the business to the unnecessary risk of tenant default. What’s more, overburdened administrative staff then need to take additional time and effort chasing up non-paying and uncommunicative tenants; a repetitive hassle for all involved and a hindrance to performance.
The longer the saga drags out, the less likely a commercial tenant is to meet their rental obligations. This is why implementing a proactive, automated collections process could be transformative for your commercial tenant management. A workflow that prioritises the early identification of risky tenants, and the standardisation of your communication with them, should see repetitive, time-consuming debt collection tasks disappear from the plate of the back office.
Tools to help accelerate outstanding payments
The suite of collection tools available from CreditorWatch to accelerate rental payments represents the gold standard in commercial tenant management. With smart and intuitive features integrated with core systems already in use, they’ve proven to expedite debt recovery and mitigate against credit risk and bad debt. All this while avoiding the disruption of engaging debt collection agencies or unproven debt collection ideas.
In coordination with our industry-leading customer service team, your property management department will finally find themselves adequately armed to chase up unwilling commercial debtors and safeguard your cash flow.
Standardised Debtor Communication – Our debt collection communication resources empower the team with flexible templates to follow up on risky or late-paying tenants proactively, without the need for a debt collections agency to get involved. Even the mere act of sending a collections notice with CreditorWatch branding may significantly improve commercial tenant payment outcomes. In fact, using our logo has been shown to increase your chance of collecting the payment owed by 53%. Automated, professional and timely: the channels of communication between your business and commercial tenants will be optimised to ensure that swift payment is as likely an outcome as possible.
Your relationship with high-value commercial tenants can be maintained through the use of these flexible templates while ensuring that the revenue from your rent roll continues to flow freely. This preserves your integrity while prioritising the cash flow you need to keep the wages paid.
Compatibility with Xero and MYOB – The seamless integration of our debt collections tools with key accountancy software products Xero and MYOB allows a number of clear advantages for your agency. Any commercial creditors can be verified and analysed, with potential high-risk tenants identified early and prioritised for rent collection. The sooner you’re made aware of risky renters, the sooner you can act proactively to chase up the outstanding rent – prior to their arrears spiralling out of control. Additionally, identification is made easy within our system by virtue of a simple ABN search, ensuring that your lessees actually are who they say they are.
Default Registrations – In the event of non-payment, you can use our debt collection tools to register a default against that business. This system is exclusive to CreditorWatch, allowing your team and other trading partners to flag risky operators. These registrations act as a serious deterrent to dodgy commercial tenants, as 91% of customers have indicated that they would not trade with a business that has a default against it. When a lessee understands that you have this reprimand available, they are more likely to ensure that their payment behaviour is up to scratch.
Should you need any support as you engage in the upgrade of your collections processes, be sure that you can rely on the personalised and expert customer service team at CreditorWatch. It’s critical that you have access to professionals who can answer any and all of your questions and assist in the best usage of our suite of tools. Without such support, you might not be extracting the maximum value from the debtor/tenant management products at your disposal. Our team ensures that you reap the full benefits of our collections technology, empowering your administrative staff with the knowledge they need to use the available tools to their fullest extent.
The tenant management strategy that you implement has a profound impact on the ability of your real estate business to maintain its regular revenue stream, cover its overheads, and avoid debt collection agencies. Proactively reduce your debts and get paid faster – contact CreditorWatch for a free demo.
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