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We talk about the importance of relationships with our clients and tenants. However, what many property managers fail to do is take good care of their contractors.
Over the years, I have had so many contractors come to me for advice on how they can get ‘other agents’ to pay them on time like our office does. They claim that they wait months to get paid, and in some cases years. When I ask them the reasons they are given for the delay, it generally always comes back to the fact that it is a bond claim and the property manager is ‘waiting’ on a claim to be paid. The other excuses are that they are ‘waiting’ for enough rent to come in to pay the invoice.
My advice to the contractors is to make sure they set their terms from the beginning. This should include the expectation of payments, regardless of the process the property manager needs to go through to recover the funds. Ultimately, the invoice belongs to the property owner if it relates to their investment property. If the agency is waiting on a bond dispute or funds from the tenant to finalise an invoice, the owner needs to be aware that the contractor has to be paid in the interim unless we recover the funds within the payment terms for that particular contractor. It doesn’t seem fair for the owner to pay if it is a tenant-related issue. However, the reality is, we don’t have access to the bond. As the managing agent, all we can do is claim based on our evidence to recover the loss. As agents, we act for the owner and it is the owner’s obligation to pay the contractor until the funds are available to reimburse.
The industry needs to understand that contractors rely on this income to survive. They too have bills to pay, wages and other financial obligations. I can’t imagine that you would get away with not paying your property manager for months or not paying your landlord for months, so why is it so acceptable to make a contractor wait for this long?
The truth is, we need these people, the owner needs them and the industry needs them and therefore we also need them to continue to be profitable so that they can keep working for us. If they do refuse our work, our clients will end up paying more because we will be limited with who we can call. Alternatively, our contractors will somehow need to recover their loss in order to continue, so the next thing they will do is increase their hourly rate, once again, costing our clients more.
The other important message to consider here is that a majority of property investors are tradespeople. So if they are looking for management, which agent do you think they will choose? The one that pays on time, has keys ready when they call in and the one that treats them like part of the family? Or the one that hangs them out to dry and doesn’t appreciate their importance?
I was inspired to write this blog after speaking with one of our contractors. They explained to me that they regularly wait months to get paid by some agents. They are a small family business, just the two of them trying to make a living doing what they love. They are supporting their family of five and they just purchased their first home with a mortgage to maintain. How can we ask them to wait months to get paid? They work so hard for so little and these are some of our best contractors.
I for one will not be a part of this. As a business owner, I personally audit all overdue invoices every month to make sure our contractors get paid on time. At the very least, if there is a slight delay with an invoice, I will personally let them know what action we have taken to get them paid and by when. If all else fails and the owner for some reason refuses to pay, the contractor has the right to pursue them for the debt, just like any other customer.
I do hope that property managers, business owners and property owners read this and recognise the need to look after our valuable contractors and get them paid.
ABOUT THE AUTHOR
Michelle Williams
Michelle began her career in Property Management in 1997 as a part-time assistant property manager. It was not long before Michelle discovered this was what she was born to do. In 2009 she created @home Property to reflect her passion for the industry and commitment to service excellence. Michelle’s love for property management is clear in her commitment not only to her clients and her team but also to the industry as a whole: she regularly shares her knowledge and experience with the next generation of property managers as a guest speaker at conferences throughout Australia and New Zealand.
In addition to multiple business accolades, Michelle's personal achievements include:
- TCCI Tasmanian Owner Manager of the year 2011
- Telstra Women's Business Awards (Finalist) 2012
- AREA Property Manager of the Year 2013
- REB – Property Management Office of the Year 2016
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