Demand For Digital Payments Drives Multifamily PropTech Upgrade

There’s a reason why paper checks have stuck around for multifamily property management companies for so long, and it’s not just because the platforms they use to collect payment from renters have hardly seen in upgrade in the past few decades.

In addition to the familiarity of the payment method, there is a sense of security that can come with renters physically dating a check to prove payments have come in on time — and for property managers, that feature can be helpful for accounts receivable (AR) and reconciliation workflows in the back office.

But the benefits of checks no longer outweigh their risks and burdens, a fact that became painfully apparent during the pandemic. It was a period of “doom and gloom,” said Entrata President Chase Harrington, but one that showcased the power of electronic payments to endure the disruption.

In a conversation with Karen Webster, Harrington explained how the forced jump to electronic payment acceptance in the multifamily arena encouraged an acceleration of property management firms’ digitization efforts. Meeting these newfound expectations became an opportunity for technology providers like Entrata, but supporting modernization will require more than enabling ePayments or stitching together siloed services.

Beyond Rent Payments

FinTech innovation has opened the door for businesses across industries to access tools to automate financial workflows. For the multifamily property management space, these systems have focused mainly on helping firms accept electronic payments, a shift Harrington said was dramatically accelerated amid the pandemic.

“As leasing offices shut down, the paper didn’t work anymore,” he said, adding, “Finally, there was that paradigm shift.”

Industry players awoke to the realization that electronic payments work just as well as checks and, indeed, can be far more beneficial to accounting and cash management purposes.

But the health crisis went even further to change property managers’ mindsets.

“People started to say, ‘Wait, we can operate our business differently because of technology now,’” Harrington said.

Companies today demand far more than portals to accept payments or respond to maintenance requests. They need solutions that can support financial management and accounting, accounts payable (AP), and even marketing and prospect sourcing.

Increasingly, said Harrington, these organizations seek value-added solutions that can tackle other key frictions, like the risk of fraud, which he said is a “massive issue” in the multifamily industry, and saw an uptick amid the pandemic.

For Entrata, that means a significant push to add solutions like identity protection and income verification of housing applicants, identifying payment behaviors that could signal tenant fraud, and expanding these protections into firms’ own AP workflows with the ability to generate single-use virtual cards — a feature currently in the works for Entrata.

Unifying The Experience

In response to multifamily property management firms’ demands for greater functionality, industry technology providers have often turned to merger and acquisition (M&A) activity to scoop up ancillary service providers and incorporate them under one brand. But this can result in clunky interfaces and render a platform too rigid to continue adapting to future needs and market shifts, Harrington said.

Embracing a cloud-native, application programming interface (API)-friendly approach from the get-go means end users and their own clients do not have to bounce around from one system to the next, while the solution can also expand its integrated functionality more efficiently.

“That provides so many efficiencies from data integrity to process efficiency,” Harrington said.

That flexibility will be vital for Entrata as it expands across borders and allows property managers to seamlessly enter their own new markets with a platform that can adapt to local languages, currencies and the unique behaviors of renters.

This strategy also allows the portal to connect the dots for multifamily property managers in a variety of ways.

For example, the ability to loop directly into payroll systems or renters’ bank accounts means further mitigating the risk of photoshopped paystubs or income data errors. Similarly, if a property management firm wants to understand how they should invest in marketing efforts, a portal that offers both marketing and accounting tools can wield accounting data to assess how much a firm should spend to obtain the highest return.

Having raised $507 million this week from Silver Lake, Qualtrics Founder Ryan Smith, Vivint Smart Home Founder Todd Pedersen and others, Entrata will continue to prioritize this system flexibility as it expands not just into new geographic markets, but also within multifamily industry niches.

Harrington said there is significant activity “across the board,” with retirement and senior living an active space, while military and affordable housing are also expanding segments.

For multifamily property managers, the ability to step into these new segments, broaden their reach into new geographies, and streamline overall business management will need more than back-office digitization. It will require solutions that can unify and streamline workflows from AR to AP, with an interface that eases adoption for property managers and renters alike.

With its latest funding, Entrata will continue efforts to fill those gaps for the industry.

“We see the momentum we have,” Harrington noted. “We don’t want to lose the momentum; we want to keep pushing it forward.”