In my role as accounts manager of a number of property management companies, perhaps the most difficult and frustrating job is chasing arrears.
For residential tenants who receive the majority of their rent from Housing Benefit, the job becomes much more difficult. As their benefit changes, so does the need to adjust their contributions. Whilst they are quick to reduce their top-ups as soon as their benefits are increased, rarely do you find a tenant increasing their top-ups when their benefits are reduced!
We tried various ways to keep on top of rent payments - keeping a close eye on arrears reports, insisting on tenants setting up regular standing orders into our account and even offering to collect the cash whenever necessary!
Over a short period of time it became increasingly clear that the system was flawed and that there had to be a more consistent way to collect the rent.
Need for Change
In 2007, when Housing Benefit began to give way to the Labour Government’s farcical Local Housing Allowance (LHA), we encountered a new problem. Regulations stated that all LHA payments would now be paid to the tenants, leaving it to their discretion if and when they passed the rent onto the landlord!! Only once a tenant reached eight weeks’ worth of rent arrears would an application to have their payments redirected to the landlord be considered by the local council! Immediately, this meant that in most cases you could kiss goodbye to the first eight weeks’ of rent!
As our overall arrears balance continued to grow rapidly, we decided that the only way forward would be to insist on a blanket policy that all new and existing tenants commit to pay their rent by direct debit. No longer could we rely on waiting for tenant’s to offer us the rent! We had to be in control of collecting the rent from their account, rather than wait for it to “arrive in the post”!
Even standing orders could no longer be relied upon. Far too often, the tenant would cancel the standing order and it could be weeks before we were made aware that the payments had dried up.
We contacted our bank thinking it would be a doddle to start collecting rents as and when we fancied from our tenant’s bank accounts. We were left surprised when our bank declined our application on the basis of high risk. Furthermore, the costs they were suggesting were astronomical! However, they recommended the use of a Facilities Management company.
We carried out extensive searches and contacted various companies who were offering to collect rents for us by direct debit. The leader of the pack both in terms of efficiency and cost was FastPay.
In a matter of weeks, it was obvious that we had made the right decisions. With our new policy, our portfolio of properties now attracts higher-class tenants.
No bank account means no tenancy. A reluctancy to sign a direct debit form sends alarm bells ringing as to the viability of the applicant.
Every new tenant, regardless of whether they receive benefits or not, now pays their rent by direct debit. Any shortfall in rent for tenant’s receiving Housing Benefit, is collected by direct debit. If their benefit entitlement changes, we simply adjust their direct debit amount accordingly.
When a payment bounces, or a direct debit is cancelled, we are informed immediately by email. Instead of waiting weeks to find out a standing order has been cancelled, we are immediately aware of any problems and can deal with the issue before the arrears escalate out of hand.
The efficiency of all the staff at FastPay, ably led by their MD, Todros Grynhaus, is second to none, and I would personally recommend FastPay to anyone and everyone!
Thank you loads!
I run a music school which provides one to one instrumental tuition and for many years we have billed our students on a school term basis. Rather than continue with this method which confronts students with a large bill to pay three times a year, I decided to look into the possibility of students paying by Direct Debit on a monthly basis.
I found FastPay's website was easy to read, understand and user-friendly. The fees for the service FastPay provides are clearly displayed and not over complicated as was the case with some of the other companies I considered.
When I contacted FastPay for further information, both by e-mail and phone, I received prompt and efficient replies to all my questions. Three months later, I'm happy to say that I am continuing to receive a really good personal and professional service from the FastPay team and I have recommended them to several other business colleagues. Despite these uncertain times my business continues to grow.
Thank you FastPay
Anne Sheehan Music School Ltd
Mardon have been in the business for nearly 10 years and started as a small family business. We found that many of our customers needed our recycling equipment to progress their business but were unable to afford an outright purchase, so we decided to rent them out on a monthly basis.
As time went by, our customer base grew and the company evolved, payments became increasingly difficult to track down and keep up to date, and it became apparent that we would need a separate rental company. After discussions we also decided that payment by direct debit would form part of our terms and conditions, as we wanted to overcome the increasing customer debt, and reduce time spend chasing for payment. We found our own bank most unhelpful, but then we discovered FastPay.
FastPay helped and advised us every step of the way, and even supplied direct debit mandates with our company logo. The charges were very reasonable, and the procedures fairly straight forward the staff were very helpful and responded very quickly when I was uncertain of anything at the outset. In fact, we were so delighted with the straight forward service that we decided to use the service for our original company, and so set up two FastPay accounts.
We have never looked back and feel strongly that our decision to offer payment by direct debit was the right one, a good 90% of our rental invoices are paid regularly and within the 30 days credit limit, and new customers with no trading history even pay monthly in advance. We are very pleased to be associated with FastPay, and look forward to a long and successful association with them. I would not hesitate to recommend FastPay to service payments by direct debit from your customers. Well Done Guys!!
Mardon Recycling Machinery Ltd
Mardon Rentals Ltd