There are multiple complex needs that commercial real estate organizations have to contend with. From making high-value property acquisitions to managing vendor payments or collecting incoming rent payments, the proper channels can help owners and operators build strong vendor relationships and gain valuable visibility into operations without disrupting workflow.
“Commercial real estate organizations need payments that are frictionless. They should be seamless, convenient, fast and secure,” said Reny Simon, Executive Director of Corporate Treasury Consulting for Commercial Banking.
Using Real-Time Payments (and Same-Day ACH)
These widely accepted electronic payment methods can deliver funds faster than traditional ACH. With real-time payments, a settlement can be nearly instantaneous.
Some benefits include:
- Faster strategic decisions, such as reconciliation, can be easier when you do not want to wait to confirm payments have been settled.
- The power to negotiate terms, as real-time payments and same-day ACH are attractive to those who want payment on demand.
- Lower operating expenses, which offer more affordable transaction fees than wire transfers.
With this said, real-time payment and same-day ACH payment networks can only work to accommodate payments of up to $1 million. Higher-value urgent payments will require wire transfers or blockchain payments.
Using Blockchain Payments
Blockchain is not merely for crypto, as it can facilitate traditional currency payments. The blockchain platform that some banks use has several benefits for commercial real estate, including delivering fast, programmable payments.
Some benefits include:
- Speed and versatility, as blockchain payments can settle within minutes and accommodate larger sums than real-time payments.
- Strong investor relationships, as blockchain can be attractive to private equity firms whose investors demand faster payments.
- Efficient automation, which blockchain can offer through programmable payment options that can be executed automatically by following accountholder instructions.
- Transparency and finality, since once a blockchain transaction occurs, it offers end-to-end visibility into the specific transaction.
Simon stated, “[Blockchain payments] can be a good solution for private-equity firms and asset managers who are willing to pay because of the value it brings to investor relationships.”
Card Programs
A business or corporate card program can extend the availability of funds while ensuring vendors receive their payments quickly. Card payments are seamlessly and widely accepted, which makes them a helpful option.
Some benefits include:
- Improved cash flow, since card payments lengthen the time between a purchase and when a payment is due, they allow businesses to utilize their liquidity in the meantime.
- Streamlined tracking and processing can be integrated into accounting or enterprise resource planning systems (ERPs) and can help businesses gain visibility into expenditures.
- Controlled spending, since card programs allow for customizable spending controls, such as restrictions upon certain types of transactions and amounts, which prevent improper payments.
Strategies to Consider
The following strategies can help you ensure that adopting new payment methods goes smoothly.
- Working closely with your bank allows you to leverage the full benefits of faster, frictionless payments that require strong connectivity between your banking platform or account, ERP, or treasury management systems. Engaging with your bank early can help you avoid hurdles.
- Training your employees to understand your payment networks better can help you work more effectively with vendors or clients to find the optimal payment solution and negotiate better terms.
Rolling out new offerings gradually gives everyone time to adapt, so starting small is helpful when integrating new systems or processes into business practices. This allows employees to adjust more easily to change, resulting in more successful outcomes.
Simon explained, “Testing with a small number of suppliers helps you understand the payment experience before rolling it out broadly, allowing a controlled implementation and onboarding process.”
