According to the annual Property Week PropTech survey, almost 48% of property businesses had tested new technology because of the COVID-19 pandemic.
If your lettings business is one of them, you might be trialling or considering a rental payment platform to enhance the complicated and time-consuming process of collecting, reconciling and paying out rent.
However, when it comes to rental payment, it pays to be cautious – after all, you are dealing with someone else’s money and the consequences of getting it wrong can be serious, with risks to your reputation, clients and business.
So, what should you look for when it comes to rental payment PropTech and what sort of questions should you ask of any potential provider?
Here are the top 10 things to look for before you sign on the dotted line.
1. Consider your client account – If your business lets properties, you need a client account – no ifs or buts. How does the PropTech you’re considering work with your client account? Does it involve constantly downloading bank statements, manually inputting bank amounts into the software and then logging onto your online banking to pay landlords and contractors? Or is it all seamlessly integrated into one easy-to-use platform?
2. Compliance – Can the platform you’re looking at provide the information needed for your mandatory Client Money Protection (CMP) scheme? When calculating premiums, some CMP providers want to see evidence of exactly how much money you hold in your client account and how much client money you were responsible for at a given time and date. If more adopt this approach, being able to provide this evidence through your payment platform could see your premiums fall. With RoPA stalled but still on the horizon, evidence of the correct use of a client account could soon become even more essential.
3. The need for speed – Can the system pay all landlords, suppliers and your agency commission from reconciled client accounts on the same day the rent is received? Or will your landlords have to wait until you’ve had the time to reconcile every rental payment made throughout the month?
4. Precise to the penny – Where is your client’s money right now? And who has had access to it since the moment the tenant paid the rent? A payment platform should be able to tell you with a completely secure and tamper-proof log, so if money went missing it would be easy to find out what went wrong.
5. Payments track record – Who runs the payment processing system? Is it a large multinational bank, a portal that’s dabbling in rental payments or even a rival agency that’s developed some software in-house that they’re now offering to the market? Ask yourself if you should be trusting your rental payment processing to them. It’s vital to find out what kind of encryption a payment provider is using and to make sure data is securely backed up if the worst was to happen. Data loss – or worse, data theft – can result in huge losses to clients and easily destroy an agency’s reputation.
6. Getting started – New technology brings new opportunities for your team to develop and take on extra responsibilities, but learning new skills takes time and training. Getting started is often be the most stressful part of a new system so don’t be afraid to ask how the onboarding process works. Will a real person be available to help you while you move to the new system? Make sure free training and technical support is available when your team needs it, for as long as you are a customer, rather than as expensive add-ons.
7. Wisdom of the crowd – Who else uses the PropTech you’re looking at? It’s worth asking on Facebook or Twitter. You could even ask organisations like The Guild or Propertymark for recommendations.
8. Getting what you paid for? – Sometimes, technology promises a lot, but after reading the fine print you can discover that to get all of the marvellous time- and cost-saving features you’d need to shell out for add-ons or extra integrations. Ask upfront what is included and if it’s all part of the price, so there are no nasty surprises further down the line.
9. Don’t get tied up – You can do all the research in the world but until you take the plunge and start using the platform you won’t truly know the impact on your business. Some PropTech will try to tie you in for a fixed-length contract – while others will give you the freedom to leave if it’s just not right for you.
10. Payment pains – The property industry can be tough right now, so adding the fixed cost of a PropTech platform can hit agency finances – especially with mounting redundancies worsening tenant arrears. Make sure you know the fee structure when you sign up to a new payment platform – is it a fixed cost or flexible, depending on the amount of rent you process?
Asking the right questions now will help your agency find the best possible payment processing partner to work with. As with any financial partner, it’s vital to understand all the possible costs and benefits before signing on the dotted line.
While an add-on to a property management platform or some new accounting software may look cost-effective, it’s important to understand what the package is capable of – after all, when you’re dealing with other people’s money it pays to do your homework.
*Neil Cobbold is Global Chief Sales Officer at PayProp