Tailor Ridge eBill case study
Scalable U.S. Bank eBill Service makes lender more efficient while borrowers benefit from a simple, secure electronic payments process.
What makes Tailor Ridge Capital Management stand out as an asset-based real estate lender is that its principals understand the needs of their clients, small to midsized businesses that acquire and rehabilitate distressed properties for resale or use as rental properties. Why do they understand? Because they’ve walked more than a few miles in their customers’ shoes.
“Two of my partners spent most of their careers on the other side of the table,” explains Chris Johnson, one of the new business’s co-founders. “They actually built several real estate firms using this type of capital.”
Beyond access to capital that the traditional financial system doesn’t offer, what Tailor Ridge understands its customers want is “a fast, secure, no-hassle experience,” Johnson says. Partnering with U.S. Bank and leveraging the U.S. Bank eBill Service, an electronic bill presentment and payment (EBPP) solution, has allowed the specialty lender to provide that experience each month as customers make their loan payments.
An efficient, scalable EBPP solution
Because Tailor Ridge is a new company with a small staff, being efficient in everything they do is a high priority.
Right out of the gate, Johnson says, he and his partners saw that collecting paper checks in the mail from borrowers and getting them deposited was a very inefficient way to handle accounts receivable. “We’d rather spend our energy serving the needs of our customers,” he says.
With team members working virtually during the pandemic, they were periodically commuting from their homes to their offices in New Jersey and Rhode Island to see if any customer checks had arrived. Once collected, those checks had to be forwarded to the company’s fund administrator/fiduciary in Chicago, which was required to deposit them due to the rules for managing third-party capital.
Johnson, who grew up in Switzerland and didn’t write a check until he moved to the United States, recognized the need for a more efficient electronic payment solution. Additionally, because Tailor Ridge has big aspirations, he saw any solution had to be scalable.
“We started managing a real estate investment fund in June 2020 with about $1 million in capital and are at $10 million now,” Johnson says. “We hope to be at $50 million and then $100 million or more.”
Because of these goals, any EBPP solution had to easily accommodate rising numbers of borrowers and monthly payments without burdening staff.
eBill Service: Simple and secure
Tailor Ridge went to U.S. Bank, its treasury management services provider, looking for a simple, secure solution and found it in the eBill Service. In early 2021, U.S. Bank helped the company implement the service in what Johnson describes as an extremely smooth and straightforward process, and all its borrowers pay using eBill today.
Instead of driving to the office to see if any checks from borrowers have arrived in the mail, now Johnson and his colleagues have their borrowers initiate low-cost electronic payments online at their convenience.
All Tailor Ridge has to do is transmit bills to U.S. Bank for borrowers enrolled in paperless billing. The bills are posted to a secure website and then borrowers receive an email notification that their bills are available. The service advises when the bills are due and provides a link enabling borrowers to log on to the website and remit their electronic payments.
“With eBill Service, the moment the customer hits the pay button on the website, we get an email saying they made a payment,” Johnson says. “It’s instant notification.”
Knowing immediately that a borrower has paid helps with reconciliation and monitoring customer payment performance. “We really appreciate the real-time information we receive,” Johnson says. “When you send a bill and 20 minutes later it’s paid, that tells you a lot about a new borrower.”
Tailor Ridge is using the standard eBill Service offerings. However, in the future, Johnson says the company may look at taking advantage of a feature that supports text alerts to customers when payments are due. “We’re dealing with a lot of small business owners who get very busy. Text alerts could help them.”
The right payment fit
When Tailor Ridge opened for business, its fund administrator suggested several banks it could use for treasury management services. Johnson describes the partners’ decision-making process: “U.S. Bank is one of the largest banks in the United States. It has top technology infrastructure and name brand recognition. It was an easy choice.”
The same rationale explains why Johnson and his partners were so comfortable adopting the eBill Service.
“We’re in the money business,” Johnson says. “We like working with a blue-chip institution like U.S. Bank that ensures all IT security is buttoned up, because we can’t afford to have an issue with our customer payments.
“From our perspective, having everything hyper professional and secure is extremely important,” Johnson says. “Working with a major financial institution like U.S. Bank is the right fit for us.”
Having been real estate investors in the same space themselves, the principals at Tailor Ridge believe the decision to partner with U.S. Bank on the eBill Service is one their customers appreciate.