December 12, 2012
How Much are Paper Cheques Costing You?
The cost of using paper cheques can be significant. Yet in spite of that fact – and the fact that electronic payments such as debit and credit cards, online transfers, and PayPal are proliferating widely – there are still an estimated two million paper cheques written every day in Canada.
Overall, the usage of cheques is declining by about 6% a year in Canada. But in the property management business, cheques are still a common means of collecting rent payments.
A Limited Transaction
Among the many drawbacks to relying on paper cheques is a considerable loss of time and money:
- Property managers must take the time themselves, or have an authorized person take the time, to deposit cheques.
- Banks have cut-off times for when they process cheques. If you deposit your cheques after 3:00pm on Friday, the transaction won’t be processed until the following Monday.
- Also, there may be holds on the funds, further limiting your access to cash flow.
- With any cheque, you run the risk of coming across an account with nonsufficient funds, and of incurring the subsequent NSF charges.
Weighing the Costs of Paper Cheques
What does this all mean for your business? According to independent research, the cost to process cheques can range from $15 to $25 for each cheque issued. This includes both hard and soft costs, such as clerical, cheque requisitioning, authorization, reconciliation, tracing and more.
Consider that cost, month after month, unit by unit. It doesn’t take long to add up to a pretty hefty number.
Growing Demand for Digital
In addition to all these costs, there’s another important issue to consider: the growing demand for digital payment options. With the rising popularity of mobile devices, increasing numbers of Canadians rely on their smartphones for paying bills and checking account balances.
A recent Globe and Mail article reports that there are more than 10 million smartphone users in Canada, and about 3.5 million banking app users. Canadians are coming to expect digital payment options, and it won’t be long before they won’t settle for more outdated alternatives.
Investing in Digital
By offering your tenants online payment methods, you can reduce or eliminate many of the direct costs associated with paper cheques. You’ll also be providing residents with a current, convenient means of paying their rent, keeping them satisfied and more likely to stay on as your tenant.