A recent blog on the American Express OPEN Forum by Denise O'Berry, author of, Small Business Cash Flow: Strategies for Making Your Business A Financial Success, points to the essential need for businesses to be paid in a timely manner in order to function and profit.  Ms. O’Berry shares examples of an independent contractor and small retail business owner, both who struggled with timely payments and management of receivables until they found easy solutions in readily available technology enabled platforms like PayPal and Square.  By requiring the use of these cashless services to customers as a means to qualify for goods and services, small business owners have found a solution to their cash flow woes that easily fits in with their administrative needs.

Similar options in multifamily abound for residents with stellar credit, who can schedule ACH pulls to be automatically delivered from their personal bank accounts to those of the communities where they live when rent is due.  Ditto the use of scheduled payments via credit or debit cards that eliminate the need for residents to deliver a paper check for rent.  Handling cash flow for the segment of your resident population that qualifies with conditions based on credit is a whole other ball game.  For these residents, the ones who without technology enabled support tend to fall into the 80/20 rule when it comes to on time rent payments (i.e. 80 percent of the time residents with less than perfect credit are the ones who will pay rent late), cashless options have been few and far between. Until now. 

Services like rent from payroll work with standard payroll programs utilized by the vast majority of employers that enable workers to direct funds to a designated bank account – or accounts – of their choosing in the same manner individuals can direct funds to a college or holiday account. The difference with rent from payroll accounts is, first, that they are emptied every month when funds are forwarded from the service provider to the community on behalf of enrolled residents.  Second, given the predictable cash flow that comes when residents are no longer asked to budget their own funds, the rent from payroll option gives communities the comfort to make modest changes to conditionally lease offers that replaces higher security deposits and make it more attractive and affordable for an applicant to say ‘yes’ to a lease.  In addition to cost savings to the resident, rent from payroll provides more predictable cash flow for rental communities which, like the independent contractor and small business in Ms. O’Berry’s blog, depend on timely payments in order to operate.