In an ever-changing economy, financial challenges don't discriminate, affecting both residents and operators alike. From delinquent rent payments to inconsistent cash flow, economic trials create a ripple effect that greatly increases financial risks for operators.

Economic challenges are inherent to any market or industry, and impact individuals across all social classes. For residents, it may be the loss of a job, volatile income, unexpected medical costs or simply a major life event that causes financial setbacks. On the other hand, many operators grapple with maintaining steady income streams from rent, simplifying the collections process and mitigating financial risks in an uncertain economy.

In an effort to diminish those risks while helping residents strengthen their financial footing, operators are engaging in proactive measures that improve rent collection processes and on-time payments. Like other modern processes within multifamily, operators are turning to digital platforms to create more comprehensive collections strategies and develop more holistic, proactive methods for rent payments.

Payment challenges
A major hurdle that many operators face is the growing prevalence of non-sufficient funds (NSF) fees that come about when a resident writes a physical check that cannot cover the amount due. Insufficient checks not only severely disrupt expected revenue projections, but they add an unnecessary layer of time and complexity to the collections process.

When it comes to the rise in gig economy and freelance jobs, we've seen both the benefits and the downsides. While such jobs provide workers flexibility and the opportunity to generate multiple sources of income, they can also be the cause of irregular pay and volatile cash flow, making it difficult for residents to make timely rent payments each month.

Another increasing challenge is the prevalence of ACH debit and credit card chargebacks for rent. Should a resident dispute a charge for a payment made towards rent, operators lose the payment, at least until the disputed charge is argued and won. The chargeback rate in multifamily is around 3% and it's becoming a growing problem.

Digital measures
Operators are enhancing the rent payment process through digital solutions that mitigate some of these payment risks, as well as add convenience and flexibility for residents. Many are centralizing payment processing and opting for features that combat these challenges, such as digitally certified ACH transfers and chargeback protection.

Having the ability to view payment activity for multiple properties in one place streamlines and expedites financial reviews and accounting tasks. It also provides a vital snapshot into renter behavior patterns so operators can anticipate and adapt to the trends that impact revenue.

Residents can gain more control over how they pay rent, and have the ability to review payment history, receive alerts regarding upcoming payments and set up automatic payments. This drastically simplifies the process and provides more convenience for their largest monthly payment.

By taking a proactive approach to rent collections, operators are able to optimize their portfolio's financial performance via the digitization of the process. They are better positioned to reduce financial risk, increase revenue and eliminate frustrating manual tasks for their associates. Embracing a modernized approach to rent provides greater financial stability for operators and residents, resulting in a more resilient community, regardless of economic conditions.