Handling move-out receivables can be a tricky part of property management. Unpaid rent, damage fees—these are the things that can quickly disrupt your cash flow if they aren’t addressed promptly. The longer these balances sit unresolved, the more likely you are to face unnecessary financial losses and operational headaches. In this post, we’re diving into why taking quick, decisive action on move-out receivables is crucial and how it can make all the difference in keeping your revenue on track.
But managing move-out receivables isn’t always straightforward. Property managers often face challenges like tracking down former tenants, dealing with disputes over charges, and navigating the complexities of collection processes.
Before handing over receivables to collections, which can cost up to 50% of the amount owed, it’s worth taking the time to personally call former residents and try to secure payment directly. Without a clear and timely strategy, these receivables can quickly slip through the cracks, leading to unnecessary losses.
Delaying action on move-out receivables can have significant financial consequences that directly impact your property’s bottom line. When these balances remain unpaid, the risk of escalating costs, lost revenue, and strained tenant relationships increases dramatically.
Escalating collection costs
The longer you wait to address unpaid receivables, the more likely it becomes that you’ll need to hand them over to a collection agency.
Collection agencies often charge contingency fees, which can range from 20% to as much as 50% of the recovered amount, depending on the age and size of the debt.
For instance, debts that are over 90 days old can incur fees starting at 25%, and debts over two years old can be as high as 50%. This means that delaying action could result in losing half of the money owed to your property.
Additionally, older debts are harder to recover, meaning you could be paying more for less return if you don’t act quickly.
Revenue losses and the critical 30-day window
Timing is crucial when recovering move-out receivables. According to the National Apartment Association (NAA), the likelihood of recovering unpaid receivables drops significantly after 30 days, with the chances of collecting the full amount decreasing by up to 50%.
Acting within this 30-day window is critical to maximizing recovery efforts and minimizing losses. This is similar to the principles in Roost’s Security Deposit Automation—acting promptly ensures you retain as much of your revenue as possible.
Strained tenant relationships
Beyond the financial implications, timely action also plays a key role in maintaining positive relationships with former tenants.
Delays in addressing receivables can lead to disputes, dissatisfaction, and potential damage to your reputation. Clear, prompt communication and invoicing can help avoid these issues, ensuring that even after tenants have moved out, they leave with a positive impression of your property management.
This approach not only helps in recovering funds but also preserves your reputation and brand integrity.
To optimize your move-out receivables process, it’s important to track key performance indicators (KPIs) that provide insights into the efficiency and effectiveness of your efforts:
To minimize losses and improve your recovery rates, having a clear strategy in place for managing move-out receivables is essential. Here are some best practices to help you stay on top of these critical tasks:
One of the most crucial steps is to send out the final deposit account statement with fully itemized charges (including receipts and photos where possible) immediately after a tenant moves out.
Not only is this often required by law, but providing a clear and detailed statement helps prevent confusion about what’s due and can reduce the likelihood of disputes.
Ensure that this statement is sent to everyone listed on the lease, not just the primary lease signer, so all parties are informed.
Following up on unpaid receivables is key to ensuring they don’t slip through the cracks. Roost recommends the following sequence to maximize recovery of unpaid balances, again, sent to all roommates on the lease by email and if possible SMS text message:
This approach balances persistence with professionalism, helping to maintain a positive relationship with the consumer while also stressing the importance of timely payment. Consistency and a clear escalation process are crucial to maximizing recovery within 30 days.
Keeping detailed records of all communications and transactions related to move-out receivables is essential for supporting timely action.
This documentation can be invaluable if disputes arise or if you need to escalate the issue to collections. Ensure you have a clear and organized system for tracking these records, so they are easily accessible when needed.
In today’s fast-paced world, technology can be your best ally in managing move-out receivables efficiently. Make it as easy as possible for residents to pay.
Include links to make a payment and by offering multiple payment methods, including:
Additionally, provide options for splitting the payment among roommates directly through the payment system. Sending electronic receipts and confirmations to all leaseholders can further streamline the process and ensure that payments are documented and tracked effectively.
Managing move-out receivables is time-consuming and often thankless, detracting from the higher-value tasks that property managers and accounting teams should focus on—like maintaining resident satisfaction and ensuring financial accuracy.
The repetitive nature of contacting former tenants, chasing payments, and managing disputes can overwhelm your team, leading to inefficiencies and burnout.
Products like Roost’s Balance Recovery and Security Deposit Automation not only reduce manual workload but also ensure timely and accurate payment tracking.
By integrating these processes directly with your Property Management System (PMS) and accounting software, you can:
This integration allows both property managers and accounting teams to monitor receivables in real-time, keeping everything in one place for easy access and management before uncollected balances are handed off to collections.
Timely action on move-out receivables is essential to reducing financial losses and improving recovery rates. By implementing best practices, leveraging technology, and addressing disputes promptly, you can streamline your processes and protect your property’s bottom line.
Roost’s Balance Recovery product is designed to support these efforts, offering a comprehensive solution to managing move-out receivables and ensuring that you recover what’s owed efficiently.
As property managers, staying proactive in managing move-out receivables isn’t just about maintaining cash flow—it’s about building a reputation for fairness, efficiency, and professionalism. By taking timely action, you can enhance your property’s financial health and set yourself up for long-term success.
