FIVE TAC­TICS TO ACHIEVE AND MAIN­TAIN ZERO AR­REARS

Want to achieve and main­tain zero per cent ar­rears in your prop­erty man­age­ment agency? Here are five proac­tive and prac­ti­cal tac­tics from Jo-Anne Oliveri.

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1 AR­REARS POL­ICY

Im­ple­ment­ing an ef­fec­tive ar­rears pol­icy can help you achieve and main­tain zero per cent ar­rears. In or­der to be ef­fec­tive, your pol­icy should be should be clear, time-lined and well com­mu­ni­cated so all par­ties un­der­stand their re­spon­si­bil­i­ties from the out­set.

Take de­faulted home loans, for ex­am­ple. As a con­sumer, if we de­fault on a home loan we know we will re­ceive a breach no­tice im­me­di­ately be­cause this is in the bank’s pol­icy, com­mu­ni­cated to us at the start of the re­la­tion­ship. In the same way, your prop­erty man­age­ment agency’s ar­rears pol­icy should be com­mu­ni­cated, un­der­stood and ac­cepted by your team, prop­erty own­ers and ten­ants when they are first in­ducted into your agency; that way all par­ties are clear on their own and each other’s re­spon­si­bil­i­ties. As a re­sult, an ef­fec­tive and well-com­mu­ni­cated ar­rears pol­icy can help re­move the risk of ten­ants fall­ing into ar­rears dur­ing their ten­ancy term.

2 AR­REARS COM­MU­NI­CA­TION TIMELINE

A proac­tive and sys­tem­atic ar­rears com­mu­ni­ca­tion timeline can also help you achieve and main­tain zero per cent ar­rears. This timeline should out­line who, what, when and how late pay­ment mes­sages are com­mu­ni­cated to your prop­erty own­ers and ten­ants. To make it easy to man­age and mon­i­tor, your prop­erty man­age­ment trust ac­count­ing soft­ware should also be au­to­mated to com­mu­ni­cate de­faults, is­sue breach no­tices and keep track of ev­ery ten­ant’s history.

For ex­am­ple, an ef­fec­tive ar­rears com­mu­ni­ca­tion timeline could look like the fol­low­ing:

Day 3 – Text mes­sage: This is a friendly re­minder that your rent has not as yet been re­ceived, please pay im­me­di­ately.

Day 5 – Text mes­sage: Your rent has still not been re­ceived. Please at­tend to this im­me­di­ately to en­sure you do not re­ceive a reg­is­tered breach.

Day 7 – Tele­phone call: Your rent has still not been re­ceived. If not paid by to­day, you will be is­sued with a for­mal breach no­tice to­mor­row. Please pay and send con­fir­ma­tion of your pay­ment to avoid breach.

Day 8 – Is­sue for­mal breach to ten­ant (depend­ing on your leg­is­la­tion) and email prop­erty owner ad­vis­ing them that their ten­ant has been is­sued with breach for non-pay­ment of rent.

Day 15 – Is­sue ter­mi­na­tion no­tice to ten­ant and phone prop­erty owner to ad­vise them that their ten­ant has been is­sued with a no­tice to leave.

Should ten­ants fail to leave upon ex­piry of the ter­mi­na­tion no­tice, you should then take im­me­di­ate ac­tion to gain a war­rant of pos­ses­sion. Never de­lay! As a re­sult, this proac­tive and sys­tem­atic ar­rears com­mu­ni­ca­tion timeline and au­to­ma­tion process can help you pre­vent late pay­ments turn­ing into ar­rears.

3 DAILY TASKS

In or­der to man­age your late pay­ments proac­tively, be sys­tem­atic about mon­i­tor­ing your rental pay­ments. Since au­to­mated rent pay­ment sys­tems down­load rental pay­ments in ap­prox­i­mately 15 min­utes, down­load­ing and re­ceipt­ing rents should be the first task com­pleted ev­ery morn­ing. Your prop­erty man­agers’ next time block should then be al­lo­cated to pro­cess­ing any late pay­ments im­me­di­ately. For ex­am­ple, if rents are re­ceipted at 8.30am then your prop­erty man­agers should process late pay­ments at 9am.

As a re­sult, car­ry­ing out these tasks

con­sis­tently on a day-to-day ba­sis proac­tively man­ages your late pay­ments to en­sure no ten­ants fall into ar­rears.

4 TEN­ANT IN­DUC­TION

When in­duct­ing ten­ants into prop­er­ties, you must ad­vise them that their full rental pay­ment must be re­ceived on or be­fore the due date, as per their Ten­ancy Agree­ment, re­gard­less of their per­sonal cir­cum­stances. For ex­am­ple, if there are mul­ti­ple sin­gle ten­ants liv­ing in the prop­erty, you should in­form those ten­ants that you will not ac­cept in­di­vid­ual pay­ments. As there is one Ten­ancy Agree­ment, it is your ten­ants’ re­spon­si­bil­ity to pool their money into one nom­i­nated ac­count from which the rent will be de­ducted.

Ten­ants should also be in­formed that they must take into con­sid­er­a­tion the de­lay au­to­mated rental pay­ment sys­tems ex­pe­ri­ence from time of pay­ment to time of re­ceipt, which is usu­ally three days. En­sur­ing that your ten­ants un­der­stand their Ten­ancy Agree­ment and are aware of how your cho­sen pay­ment sys­tem op­er­ates helps you re­ceive rent on time and avoid ar­rears.

5 ZERO PER CENT AR­REARS KPI

Each prop­erty man­ager should have a zero per cent ar­rears KPI. Im­ple­ment­ing such a KPI de­vel­ops healthy com­pe­ti­tion at both in­di­vid­ual and team lev­els, re­gard­less of the num­ber of prop­erty man­agers you have. When im­ple­ment­ing this tac­tic, keep in mind that ar­rears are counted from the time a breach no­tice is is­sued un­der your rel­e­vant leg­isla­tive guide­lines (prior to that non­pay­ment is re­garded as a late pay­ment).

Once all in­di­vid­u­als achieve this KPI, you should then count the num­ber of days zero per cent ar­rears are main­tained by each in­di­vid­ual as well as by the team. Keep­ing such records of achieve­ment en­cour­ages your team to main­tain their tar­gets and, as a re­sult, helps you main­tain your agency tar­get.

Achiev­ing and main­tain­ing zero per cent ar­rears there­fore re­quires you to im­ple­ment a well-com­mu­ni­cated ar­rears pol­icy, fol­low a sys­tem­atic ar­rears com­mu­ni­ca­tion timeline, carry out daily pre­ven­ta­tive ar­rears tasks, in­duct your ten­ants, and give each team mem­ber a zero per cent ar­rears KPI.

Im­ple­ment­ing these five tac­tics helps you avoid ar­rears by proac­tively man­ag­ing late pay­ments or, bet­ter still, en­sur­ing that rental pay­ments are paid promptly and in full by your ten­ants each and ev­ery time.

YOUR TRUST AC­COUNT­ING SOFT­WARE SHOULD BE AU­TO­MATED TO COM­MU­NI­CATE DE­FAULTS, IS­SUE BREACH NO­TICES AND KEEP TRACK OF HISTORY.

JO-ANNE OLIVERI, CIPS, TRC, Founder and Man­ag­ing Di­rec­tor of prop­erty man­age­ment busi­ness so­lu­tions com­pany ire­viloution, is an in­ter­na­tional real es­tate iden­tity who has trained over 500 agen­cies and thou­sands of agency own­ers and prop­erty man­agers world­wide. Visit ire­viloution.com to find out more.

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