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Between making high-value property acquisitions, managing vendor payments and collecting incoming rent payments, commercial real estate organizations have complex payments needs. 

The right channels can help owners and operators maximize liquidity, build strong vendor relationships and gain valuable visibility into operations—without getting in the way of workflow.

“Commercial real estate organizations need payments that are frictionless. They should be seamless, convenient, fast and secure,” said Reny Simon, Executive Director of Corporate Treasury Consulting for Commercial Banking.  

Simon shares four payment networks that offer that frictionless experience, along with tips for introducing new payment solutions smoothly.

          

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Real-time payments and same-day ACH

These widely accepted electronic payment methods deliver funds faster than traditional ACH. With real-time payments, settlement can be nearly instantaneous. 

  • Faster strategic decisions: Reconciliation is easier when you don’t need to wait to confirm payments are settled. Speed also allows better visibility into cash positions. “You’re able to make smart, strategic decisions at a much faster pace because the data is available to you in near real time,” Simon said. 
  • Power to negotiate terms: Real-time payments and same-day ACH are particularly attractive when working with vendors that want payment on demand. “It gives you room to negotiate your terms,” Simon said. “When you’re offering faster payments, you can ask for discounts or other benefits.”
  • Reduced transaction risk: Real-time payments limit chances payment delays will affect a transaction, such as closing on a property acquisition. In certain cases, they’re also available 24/7, with no cut-off times, allowing longer funds availability. Accepting real-time or same-day ACH payments can also help renters by extending the window for last-minute rent payments.  
  • Lower operating expenses: Both real-time payments and same-day ACH offer more affordable transaction fees than wire transfers. 

Keep in mind: Real-time payment and same-day ACH payment networks can only accommodate payments of up to $1 million. Higher-value urgent payments require a wire transfer or blockchain payment. 

Blockchain payments

Blockchain isn’t just for cryptocurrency–it can also facilitate traditional currency payments. J.P. Morgan’s blockchain platform has several benefits for commercial real estate organizations, including fast, programmable payments.  

  • Speed and versatility: Blockchain payments settle within minutes and can accommodate larger sums than real-time payments. They also work for cross-border payments, which traditionally take up to two days via wire transfer. 
  • Strong investor relationships: Blockchain payments can be attractive to private-equity firms with real estate funds because investors are demanding faster payments, Simon said. “If you can provide faster settlements, it improves the relationship, and investors may be willing to invest in more opportunities down the road,” he said. 
  • Efficient automation: Blockchain accounts offer programmable payments—payments that can be executed automatically, following accountholder instructions. For instance, a private-equity firm could program investor payments to ensure payouts across all funds are allocated to the correct accounts. “Programmability streamlines the process and reduces the potential for error compared with more manual processes,” Simon said. 
  • Transparency and finality: Once a blockchain transaction occurs, it offers end-to-end visibility into the transaction. J.P. Morgan also validates account details before sending blockchain payments, ensuring they reach the correct recipient. 

Keep in mind: “It can be a good solution for private-equity firms and asset managers who are willing to pay the fees because of the value it brings to investor relationships,” Simon said.

Card programs

A business or corporate card program can extend funds availability while ensuring vendors receive payment quickly. Plus, card payments are seamless and widely accepted. 

  • Improved cash flow: Card payments lengthen the time between a purchase and when payment is due, allowing commercial real estate businesses to put their liquidity to work in the meantime. 
  • Streamlined tracking and processing: Integrating card transaction data into accounting or enterprise resource planning systems (ERPs) can help commercial real estate businesses gain visibility into expenditures with more efficient reporting.  
  • Controlled spending: Card programs allow customizable spending controls, such as restrictions on transaction types and amounts, which can help prevent improper payments. Virtual cards, meanwhile, offer additional control with one-time use card numbers. 

Keep in mind: Depending on the issuer, corporate card programs may come with fees. But card programs often offer opportunities to earn rebates or rewards on spending, which can help offset costs. 

Best practices for adopting frictionless payments

These three strategies can help you ensure adopting new payment methods goes smoothly: 

  1. Work closely with your bank: Leveraging the full benefits of faster, frictionless payments requires strong connectivity between your banking platform and accounting, ERP or treasury management systems. Engaging with your bank early can help you avoid hurdles. 
  2. Train employees: As employees gain a deeper understanding of payment networks, they can more effectively work with vendors or clients to find the optimal payment solution and potentially negotiate better terms. 
  3. Start small: Roll out new offerings gradually to give everyone time to adapt, even when new payment methods offer significant benefits. “Testing with a small number of suppliers helps you understand the payment experience before rolling it out broadly, allowing a controlled implementation and onboarding process,” Simon said.    

From fast, programmable payments to tokenized investments, learn how commercial real estate investors can leverage blockchain technology.  

JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content. 

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