Paying Vendors Weekly As A Property Manager Vastly Pays Off In Meaningful Ways
Written by David Lowrey, Owner of Stress Free Property Management
As a Wesley Chapel Property Management Company, we have a hard and fast rule that vendor bills are paid weekly. Why? Well, I got this idea from an owner of an apartment community I met 15 years ago. Every time he entered the property manager’s office, this guy would turn over the “Bills to be paid” accordion folder and shake it. If any bills dropped off, he would gently admonish the property manager. You see this guy remembered how much he struggled with cash flow when he ran a smaller construction company. Clients were notorious for delaying payments 30 to 120 days. This put a tremendous amount of pressure on this guy’s business.
When you think about it, most Wesley Chapel property management companies and any other small business will net 10-15% of revenue if they are well run. If customers delay payments 120 days, the small business owner must borrow off credit cards or not take a salary to meet payroll and overhead. A lot of bigger clients (Fortune 1000 companies) delay payment so they can collect the interest earned on the money for the extra time. Smaller clients delay payment because they are not organized, don’t recognize the importance of paying their vendors fast, or they are being stretched by their own clients.
I’ve found by being quick...to pay that my company builds a ton of good will with vendors. We are given the benefit of the doubt if we make a mistake. Our vendors are much more willing to do us favors and bump a job up to the top of the list. When I need my carpet cleaner to get something done in the next day or so, he accommodates me almost every time. Same thing goes for my roofer. Any small business owner we work with greatly appreciates that he or she never has to chase us to get paid.
These type of benefits show up with our own in-house maintenance staff and other staff members as well. We also pay our staff weekly. Sure, it cost us a bit more money, but the goodwill we receive far surpasses the cost. I know people can easily plan their budgets around getting paid twice a month. It’s just a nice convenience not to have to worry about it. This is especially true when a staff member has unexpected car repairs, or their kids need something urgently for school. Knowing the next paycheck is coming in 7 days or less really helps them adjust to unexpected expenses.
Whether you are managing 10 properties or 500, paying vendors quickly is well worth the effort.