INDUSTRIAL & COMMERCIAL REAL ESTATE BRISBANE QUEENSLAND AUSTRALIA

News

Asset Management: Avoiding tardy cash flows

We have recently experienced another interest rate increase and this, coupled with higher fuel costs, has seen tenants looking to stretch their cash flow further by delaying rent payments. But landlords relying on Raine & Horne Commercial’s property management services can rest easy.

Raine & Horne Commercial addresses these kinds of trends effectively through their unique invoicing procedures and tenant liaison policy. 

The Asset Management team follows a strict arrears monitoring, reporting and follow-up regime that encompasses the obvious follow-up phone call and letter by day five of the new month.

Advertisement:

Most leases have a provision for rent to be adjusted where rent may be paid on the first of each month. Allowing for bank transfer delays and the timing of weekends in relation to the commencement of the month, generally speaking, rent and other charges should be paid by the 5th. However, tenants are stretching the payments out to the 14 day limit to ease their cash flow. Up to day 14, tenants are generally not in default and interest charges do not become applicable.

Leases are often ambiguous regarding the interest rate that is applicable to default monies. They refer to obscure bank interest charges that banking staff often say do not exist or, if they do, the names have been changed.

Assuming you can find the applicable rate and then apply it against the outstanding charges, the resultant default interest payment is hardly sufficient to motivate the tenant to pay within the prescribed time. Landlords and solicitors need to be very clear on this matter.

The default provisions do not assist a Landlord who has a bank loan repayment planned within days of the commencement of the new month. Invariably, the delayed payments result in later and later remittances to the Landlord of cleared funds and this defers the repayment schedule to the financial institution. There’s an obvious domino effect.

So how can this be prevented?

With Raine & Horne Commercial as their property management partner, Landlords benefit from effective business processes and procedures that ensure tenants stay up-to-date and aware of their obligations.

Tenants are kept aware of their commitments and the consequences of tardy payments.

Raine & Horne Commercial’s strict arrears monitoring, reporting and follow-up regime is tried and tested, and consistently keeps their management portfolio at a minimal arrears level and that is good news for Landlords. Landlords rely on this system to ensure cash flow is not interrupted and that they in turn do not incur a poor credit rating.

If you would like more information or assistance on cash flow issues, please contact Daryl Gallagher-Collins on (07)3216 6666.