Collection, control and consent – which is more important?

Rent collection has changed a lot over the years with property managers no longer having to gather their landlords' funds in person. But while electronic payment systems have made moving rent payments around easier, the legislation surrounding it hasn't moved with the times. Brock Fisher explains why we need to change our thinking when it comes to digitised payments regulated by analogue methods.

The morning ritual in property management businesses around the country follows a staid formula.

After logging on, the team goes through the motions of downloading electronic rent payment files, uploading to their operating system, running their receipting and making sure all money is accounted for, their ledgers are in balance and their trust accounting is reconciled.

Rarely do we stop to question why we do what we do.

When you consider the origins of trust accounting as we know it, you can trace it back to when property managers would commonly knock on tenants’ doors and collect rent from them.

Reading through current trust accounting regulations like sequentially numbered trust account receipt books, receipt book registers, ensuring all ledgers and accounting entries were chronologically numbered and so forth are all measures designed to give a forensic footprint and traceability to money that could otherwise be invisible or very easily go missing.

From a consumer protection perspective, these were all critical measures to ensure that a dollar handed over in cash at the door of the property could have its journey traced right up to the moment that it landed in the owner’s bank account.

The payments world has evolved significantly since these times, and electronic payment methods have meant money has had a digital footprint for years. Yet, our primary legislative frameworks remain based in the era of the cash economy.

In simple terms, the current requirements assume that modern-day software is effectively just doing the digital equivalent of a set of manual trust account ledger books.

Sure, there are some additional requirements around non-delete functionality, logging file changes by user and so forth – but let’s face it, if you were managing your books manually, these same requirements already exist because your auditor would rap you over the knuckles if you fixed errors or adjusted things in your ledgers using some Liquid Paper and just making them disappear.

Now, this is not a long lead-in to the usually polarising “trust versus trust-free” debate, because that would be completely missing the point.

We’d also be naive to think that those two ideologies are the only ways that payments can be sliced and diced.

Continued innovation will certainly result in other models not previously thought possible.

No, this is a discussion about digitised payments regulated by analogue methods.

While perfectly appropriate for the business and societal practices and the protection of consumers in the era they were written, a failure to evolve legislative language and parameters produces the awkward scenario for regulatory bodies of trying to view a continually widening number of digital payments solutions all through the one methodology.

And square pegs don’t always fit in round holes. Sometimes triangular pegs don’t either.

It also doesn’t mean that a square or a triangle isn’t an amazing solution, it just means they’re a different solution.

There is a legislative fixation on the concept of collection and ensuring anyone collecting money and doing the wrong thing is harshly dealt with.

This is completely redundant thinking.

The combination of FinTech, PropTech and property management services already means that rent payments can be made securely, invoices paid by the property manager, the agency gets paid their fees, and the owner can get their rent instantly – all without that money having to be ‘collected’ to make it happen.

So let’s stop thinking about ‘collection’ as the cornerstone of all regulation and start thinking more about ‘control’ and ‘consent’.

Who can control the direction of funds? And when they take action, is there the consent of the parties involved?

Consent can be by way of a prevailing instruction such as in a management agreement, a direct debit agreement, or in terms and conditions.

But consent can also be ‘ad-hoc digital consent’ captured in an immutable record where flexible options are presented.

In the old world, collection actually did mean control by default, because if you did the collecting, then you were in complete control of the situation.

Modern-day payment technology has already moved well past this concept.

Show More

Brock Fisher

Brock Fisher is Executive Manager, Industry & Partnerships at Kolmeo, a property management software business focused on solving for all the people in property – the renters, the owners and the property managers.