Paper checks may seem like a simple and inexpensive way to collect rent and vendor payments, but they could be costing your multifamily portfolio more than you realize. Businesses across industries spend an average of $2 — and up to $15 — per received check when you factor in labor and processing, according to an Association for Financial Professionals survey. Plus, those aren’t the only expenses that come with manual payments. Let’s look at the hidden costs of accepting paper checks and explore ways to reduce them.
Here’s what can go wrong when you use manual systems to handle payments:
Your business relies on positive cash flow for day-to-day stability, reinvestment, and growth, and manual payments can put it at risk. More than half (59%) of U.S. businesses link poor cash flow to outdated manual accounts receivable processes, according to a PYMNTS report.
Manual payments slow cash flow for a number of reasons. First, it can take several days to a week for a check to arrive in the mail. Then, your property team must manually log, deposit, and reconcile checks with your accounting systems. Unlike credit card payments, checks don’t provide your business with immediate payment verification. That means your team must wait anywhere from two days to a week to find out whether a check clears.
When a check bounces, it can take even more time to manually follow up with a resident and secure another payment. Fortunately, bounced checks aren’t common, but they happen. About 3% of renters in a recent Consumer Financial Protection Bureau study had paid a fee within the last year for having insufficient funds to cover their rent payments.
Manual accounting is vulnerable to human error, even when it’s done by trained professionals. More than half (59%) of accountants make several errors per month, according to a Gartner survey.
If your property team is still manually collecting and logging payments, they may inadvertently mishandle fees and security deposits or make record-keeping mistakes. Even small errors can trigger disputes, compliance headaches, and legal risks.
Check fraud is a real concern. Nearly two-thirds (63%) of organizations experienced it last year, according to a survey by the Association for Financial Professionals. Checks are vulnerable to many types of fraud, including:
Investigating fraud takes time, and fraudulent checks can open your business to financial losses, operational headaches, and cash flow disruption. The average loss per mail-theft check fraud case — which could include counterfeiting and altering — was $44,774, according to Bank Secrecy Act data. According to a Nasdaq Verafin study, check fraud cost businesses and consumers $21 billion in total in 2023.
Manual payments require many labor-intensive tasks, such as tracking rent, issuing reminders, and reconciling records. The time it takes to manually handle vendor payments can also add up. When you factor in labor costs, companies spend an average of $12.88 to process a single vendor invoice, according to an Ardent Partners study.
If you’re handling payments manually, you may be able to cut costs by automating rent collection and vendor payments. For example, Ardent Partners’ research suggests automated invoicing saves 50% to 80% compared to manual methods.
Because multifamily owners have specific needs, it’s best to adopt a payment automation tool specifically built for property management. A tool like ApartmentAdvisor ASSIST lets your residents make quick, secure ACH transfers and card payments. Compared to checks, ACH and credit cards offer near-instant payment verification and faster settlement to provide your business with more predictable cash flow.
Plus, ASSIST sends automatic rent reminders to boost on-time payment and improve the resident experience. In an IntelliPay survey, 45% of people said a text or email reminder made on-time payment more effortless.
ASSIST also provides an automated, secure dashboard that makes it easy to track rent, fees, and payouts and lower the risk of accounting errors. Across industries, 83% of businesses that automate accounts receivable report more efficient, accurate, or streamlined processes.
If you’re looking for a user-friendly automation tool to help you collect rent, pay bills, automate reminders, and track financials, ApartmentAdvisor ASSIST is an all-in-one solution.
Schedule a complimentary demo with our team. We’ll review your process and spotlight the most impactful AI opportunities to elevate your property operations.