Why do property management companies pay on the 1st and the 16th?
This is a common question all property management companies get asked. Why do you only pay out on the 1st and 16th of the month?
It’s because property management companies use a trust account. This is a special type of account we use since we hold money on your behalf.
It means that if our company went broke, your money is still safe and separate from our business.
But that also means there are strict audit and accounting processes. That’s to keep your money safe.
The mid-month payment (16th) is a simple “sweep”. That means any rent that has been collected is transferred to you. You’ll also get a remittance advice that shows you how much you get paid.
The payment that comes through on the 1st relates to the previous month. So the rent that comes through on the 1st of September relates to the rent collected in August.
That payment comes through after we close off the accounting for the previous month.
This means that we need to make sure:
- All the rent has the right receipts
- We meet our strict audit requirements.
- Your statement gets generated the right way.
Now here’s the real issue. Not every month has the same number of days. Some have 28, 29, 30, or even 31.
So, the “month-end” is a moving target. Which means that the 1st of the month also falls on different days.
Most property management office staff also don’t work weekends or public holidays. And the audit requirements we have from our trust account can’t be automated right now.
So if the 1st or the 16th falls on a weekend or public holiday, the payment date is moved to the next business day.
That’s why it’s important you know the exact calendar date of your next payment.
