The challenge of supplier payments in condominium associations

Syndicats de copropriétés (SDC) employ a large number of suppliers. This makes paying bills an important issue for co-owners, since they must all bear the costs together.

Who hasn't experienced the obstacle course involved in getting suppliers paid on time? For many SDCs, this responsibility justifies the decision to entrust the management of operations to a condominium manager. But how can we maintain a certain level of control to ensure that the sums paid are in line with the expectations of the administrators? That's the real debate. Fortunately, there are now ways of doing things that greatly simplify the tasks of condominium administrators and managers.

What has changed?

In the not-too-distant past, supplier payments could only be made in cash or by cheque. With the rapid evolution of technology, PayPal, credit cards, Interac, transfers and electronic payments have been added to speed up your payments and ensure better traceability.

Are these new ways of doing things better?

It goes without saying that cash is no longer an acceptable choice for good traceability and payment security when managing the assets of third parties such as TCSs. 

Cheque writing remains a good option. However, apart from the fact that it takes a considerable amount of time to prepare and process, it requires several signatures that are sometimes difficult to coordinate, whether by post or by directors travelling to the site. It's also an expensive option, since it involves the cost of cheques, envelopes, stamps and photocopies. Last but not least, there's the time it takes for the post to arrive and for the supplier to cash the payment. As a result, cheques may occasionally be cashed several days or even weeks after receipt, requiring you to keep a constant eye on the syndicate's bank balance.

Direct payment, on the other hand, is an interesting option, since it offers a rapid solution that is fully controlled by the unions or managers, and provides traceability of the sums involved. The supplier is paid directly into his bank account, avoiding delays and possible penalties. Finally, this option is often the least expensive.

How can directors maintain control over electronic supplier payments issued by the condominium manager?

Two levels of control are available to administrators. They can either verify the expense incurred directly on the bank statement, or ask to see the invoices before payment. 

However, there is now a solution on the market adapted to the reality of condominiums. This solution provides total transparency for supplier payments made by managers. All payments are approved electronically, giving administrators the same control they had when signing cheques, which are sometimes difficult to obtain, but with the speed of new technologies. We're talking here about electronic payment from supplier to multiple approvals.

What is multi-approval electronic supplier payment?

This option combines the best of both worlds: speed through electronic payment and greater transparency through multiple approvals.

The management firm prepares the payment, attaches the invoice (and/or other supporting documents) and the first level of approval is by the manager. An e-mail is then sent to the designated signatories within the union, who must in turn approve the payment. They can view the invoice and then accept or reject the payment. Until all approvals have been given, the payment process cannot be completed. This option allows you to set up as many signatories as the condominium association requires, ensuring total control and transparency of cash outflows.

 Moving towards better practice

Entrusting the management of a condominium to a property manager means delegating the sometimes overwhelming day-to-day tasks involved in managing the property and its living environment. Whether it's the physical management of the building, the living environment, stewardship, various service contracts, or financial administration including the collection of charges, these are all burdens that board volunteers are happy to part with.

Delegating doesn't mean you have to do it blindly. As the saying goes, "Trust does not exclude control". As you know, money can be the source of many conflicts and misunderstandings. Today, requiring a multi-approval electronic disbursement system is an accessible innovation that sets new standards for good governance.

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