What Are Common Healthcare Payment Processing Issues?April 1, 2023
Remittance processing involves receiving payments from customers and depositing them into the business’s bank account. In the property management industry, there are several common issues with remittance processing:
- Misallocation of Funds: This is a common problem where payments get allocated incorrectly. It’s particularly challenging when dealing with multiple properties, different tenants, and varying types of fees or charges. Payments may be attributed to the wrong tenant, property, or expense category, causing confusion and inaccuracies in financial reports.
- Delayed Processing: Timely processing of remittances is critical for maintaining an accurate cash flow projection. Delays can occur due to multiple reasons such as the time it takes to process a check, bank delays, or inefficient remittance processes. These can cause late fee issues, financial reporting inaccuracies, and may strain relationships with tenants and vendors.
- Manual Data Entry Errors: Manual entry of payment information is prone to human errors. These errors can result in inaccurate recording of payment data, misallocation of funds, and incorrect financial reporting.
- Fraud Detection: Fraud can be a significant issue in remittance processing. It can include forged checks, electronic payment fraud, or even internal fraud. Not having robust fraud detection measures in place can lead to substantial financial losses.
- Handling of Partial Payments: Sometimes, tenants may make partial payments. Determining how to apply these payments, whether to rent, late fees, or other charges, can be complex and can cause disputes if not managed appropriately.
- Lack of Automation: Still, many property management firms use manual processes for managing remittances, leading to inefficiency, increased likelihood of errors, and slower processing times. Automation can significantly improve accuracy and efficiency in the remittance process.
- Compliance Issues: Local, regional, or national laws and regulations often dictate specific handling, recording, and reporting procedures for financial transactions, including remittances. Non-compliance can lead to penalties, legal action, and damage to the company’s reputation.
- Difficulties in Reconciliation: Sometimes, the amount remitted by the tenant doesn’t match the invoice. This could be due to bank fees, the tenant deducting damages from the rent, or other reasons. Reconciling these differences can be challenging and time-consuming.
- Tenant’s Bank Returned Payments: There are cases when payments made by tenants are returned by the bank due to various reasons like insufficient funds, closed accounts, or wrong bank details. Such issues can create additional administrative work and could lead to conflicts with tenants.
- Tracking Multiple Payment Methods: With various payment methods available, like cash, checks, credit cards, and electronic payments, tracking and managing these various streams can be complex and difficult, leading to possible errors or mismanagement.
To mitigate these issues, many property managers are turning to payment processing solutions that automate the remittance process, providing a convenient payment option for tenants, automating payment processing, reducing risk, providing detailed payment records, and improving efficiency.