Electronic Fund Transfers (EFT) and Pre-Authorized Payments (PAP) allow you to streamline your A/P and A/R. Read more how you can utilize this technology to your benefit. By Yisrael Kopstick
While both these abbreviations actually represent one service, implementing these into you business can mean real savings for your company in both time and money.
EFT or Electronic Funds Transfer simply means that money can be electronically deposited to your account from almost anywhere in the world. Pre-Authorized Payments (PAP) allows a property owner to withdraw electronically a tenant's rent from their account to be paid on time, every time.
EFT can be use by everyone. In fact, you may already be using PAP with your mortgage, or car payments. EFT payments have been widely used for bill and credit card payments, but it is particularly suited for property management. Rents are usually very consistent in that they are paid at the beginning of the month and for a prearranged amount. EFT's can therefore be set up for tenants at the rent increase month and left to withdraw on set dates for the next year. The tenant will never need to write cheques or worry about getting payments to the manager on time, as it is all pre arranged.
Further, once the management company is set up for EFT payments, you can pay vendors electronically as you would a utility bill. Rent Magic supports paying vendors using EFT, so you do not have to worry about bank reconciliations.
Third Party management companies, usually pay their building owners the profit from the building every month or more frequently. Instead of writing a cheque each time, they can provide a better and faster service by using EFT.
Most major banks offer services that allow you to set up EFT pre-authorized payments and are usually very easy to implement. Furthermore, this convenience is also backed by high levels of security, so that customers or tenants need not worry of their information falling into the wrong hands. While each bank has its own procedure, all banks use high levels of encryption in order to protect their clients' sensitive data. Rent Magic furthers this security by encrypting the data you send to your bank with a separate password set by the administrator. The program generates a CPA Standard 005/1464 file, which is the standard file format for bank communication in Canada.
Some of the benefits of EFT pre-authorized payments are fairly obvious. You are paid on time, and you know exactly when to expect the funds. The guesswork is removed now that you do not have to continuously run after tenants and customers for payment. For businesses of all sizes, this is a huge advantage. Good cash flow is a major key in business success. Knowing when to expect funds can really assist in business planning.
Less apparent, but maybe even more valuable to a business owner, is the time savings. When relying on a system of cheques and collections, someone needs to collect and sort the cheques, prepare the deposits and go to the bank, sometimes more than once a day! With EFT's, you can now use the saved time and resources to much better use. Furthermore, bounced cheques are a thing of the past. If there are insufficient funds in the tenant's account, the bank handles the charges and follow-through. In fact, some property managers, using Rent Magic, in conjunction with EFT, have seen such success with these programs, that they offer significant discounts to induce tenants to use EFT payments. It is a win-win situation.
A great value added benefit is the convenience pre-authorized payment systems offer. Rent Magic comes standard with the ability to fully integrate your software with your bank so that the process is seamless and fully automated. The program furnishes the manager with full featured reports of monies collected and which bank it was deposited to, and much more. Rent Magic records all transactions to provide full integration with its accounting and rental components to provide complete and detailed reports. For documentation on the procedure to use this feature in Rent Magic's ManageUDA Online, please see here.
Talk to us today to show you how easy it is to get started with EFT and PAP. We can answer your questions and get you integrated with your bank quickly. If you want better control over your cash flow and save time and money, EFT pre-authorized payments might be the means to giving you more time to focus on your business.
Yisrael Kopstick works for Rent Magic Software, a Toronto-based software company that develops cost-effective property management solutions that are powerful, yet easy to use. Their website is http://www.rentmagic.ca.