Streamline Payments: Tips for Local Government To Reduce Rent Arrears
Local Government have been quick to recognise the opportunities offered by digital technology to deliver their
services, organise their work, engage with the public, and save money. But as well as saving money and reducing costs, digital tools also offer opportunities to streamline payments and reduce the risk of non-payment for services.
Rent arrears have traditionally been a significant challenge for local councils. Council tenants typically make up the poorest in society and many of them are ‘unbanked’. Overall 4% of the UK adult population is unbanked, approximately 1.5 million people, making it difficult to make payments in a digital world.
With recent changes to benefits and the introduction of Universal Credit, there are further challenges for local council housing departments. Housing benefits are now paid to tenants, rather than directly to landlords, and therefore they are responsible for keeping out of arrears.
Streamline Payments: How To Prevent Rent Arrears
Offering a flexible range of payment options is the most effective way of reducing rent arrears. Along with Universal Credit, increasingly pensions are also being paid direct to their recipient’s bank accounts: therefore providing the option of making direct debit or standing order payments is a logical step to take.
Another important way to ensure housing tenants don’t fall behind on rent payments is to automate notifications that rent will be due shortly. This allows tenants to ensure sufficient funds are available before direct debit or standing order payments are requested by the bank.
Tenants also need opportunities to pay using their preferred payment method (credit or debit card, standing order, direct debit, or cash). These opportunities include, online payment gateways via council websites, taking telephone payments with credit or debit cards, and also enabling rent collectors to collect online payments using a mobile phone.
Alternative Payment Arrangements
Making monthly rent payments can be a challenge for those on low incomes and benefits. Councils should also consider whether they can offer alternative payment arrangements that help tenants budget more effectively.
By using online payment gateways, through council housing portals, it is feasible to allow tenants to pay their rent on a weekly basis, or to allow different members of the household to split payments between them. Similarly direct debits and standing orders could also be collected on a more frequent basis involving smaller amounts.
As the number of UK adults with a smartphone or tablet also increases, there may be ways for councils to take mobile payments too. Some local authorities are exploring mobile payments as a means to provide council users with their preferred payment method, and to reduce costs, receive payments faster and streamline payments.
Using a smartphone, tenants could have a more convenient method of paying their rent, without having to key in long credit or debit card numbers and other details. Councils stand to benefit from lower transaction fees and instant transfers of funds improving cashflow.
Of course, increasing digital payments has implications for cyber security and data protection. Councils may need to educate their users about the risks and how to keep their data safe. Similarly, councils also need robust fraud prevention and detection tools in place to protect their tenants’ payment information and identities.
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