The week after quarter day
The rent was due on the quarter day. By the following week most tenants have paid, but a dozen have not. The credit controller works through an aged debt report, emails the tenants they remember, and phones a couple. One tenant says the demand never arrived. Another promised to pay on Friday last quarter and did not. A third has been paying late every quarter for two years and nobody has formally noticed.
The asset manager asks for an arrears update for the investment committee. It takes a day to put together.
Why arrears management stays manual
Commercial arrears are not like consumer debt. Each tenant is a business with its own lease, contacts, payment habits and, sometimes, rent deposits or guarantors. The decisions about what to do are commercial and sometimes legal. But most of the chasing is routine and could be consistent.
- The ledger is in accounts, the tenant contacts are in the property team's files.
- Promises to pay are noted in emails that nobody can see later.
- Reminders depend on the credit controller's week.
- Repeat late payers are not flagged.
- Escalation to the asset manager or solicitor happens late, without the history.
What uneven chasing costs
Cash comes in later than it should. Tenants learn that paying late has no consequence. Problems that could have been solved early, a tenant struggling or a demand sent to the wrong address, grow until they are harder. And reporting arrears to investors or lenders is a manual job each time.
The credit control we put in place
- Each tenant's position is updated daily from your accounts system or property management system, so the arrears list is always current.
- Reminders go out at intervals you set, in wording you approve, to the contacts held on the tenant record. Each reminder includes the demand and a statement.
- Replies are read and sorted: payment promised, query raised, demand not received, dispute. Each goes to the right queue, and a person handles anything that is not routine.
- Promises and payment plans are recorded with dates, and if a payment does not arrive the next step starts.
- Tenants who pay late repeatedly are flagged, with their payment history.
- Escalations go to the asset manager with the lease summary, deposit or guarantor details, and full chasing history. What happens next is their decision, with their solicitor where needed.
- An arrears report by building, tenant and age is available at any time for committees or lenders.
| Tenant situation | Automated step | Person's step |
|---|---|---|
| Forgot to pay | Reminder and statement | None unless no response |
| Says demand not received | Resend and check contact details | Confirm the address is right |
| Promised a date | Record and watch for payment | Follow up if missed |
| Raises a query | Log against the demand | Resolve the query |
| Persistent arrears | Flag with history | Decide the commercial or legal next step |
A calmer week after quarter day
Routine reminders go out without anyone remembering to send them. The credit controller spends time on tenants that need a conversation. Promises are tracked. Asset managers hear about problems early, with the facts in front of them. And the arrears report is a click, not a day.
Late payment interest, where your leases allow it, is calculated from the due date and the actual payment date rather than estimated at the year end, and a person decides whether to charge it. Rent deposits and guarantors attached to a lease show on the escalation, so the asset manager knows what security exists before deciding on the next step. None of this removes judgement. It means the judgement is made with the facts.
Is arrears chasing like this for you?
- Chasing depends on who has time after quarter day.
- Promises to pay are not tracked.
- Repeat late payers are not flagged.
- Arrears reports take a day to produce.
- Escalations arrive late and without history.