Paper rent payments are the traditional ways that landlords have navigated rent collection. Collecting cash and checks is a tried-and-true method for landlords, but with more contemporary alternatives in online spaces, they are no longer the best methods.
Paper methods are more difficult, less flexible, and are conducive to more late rent payments. This article takes a look at why these traditional methods aren’t your best bet, and why the alternative of having your tenants pay rent online is going to help both of you out in the long run.
Less Safe
Rent payments are a transaction, and with the transfer of money it is incredibly important that your process is safe. On the surface, it may seem like the direct transfer of cash is safer than using property management software as an intermediary. However, it is important to keep in mind that cash can be mishandled. There is a buffer of time between cash or a check being delivered and it being brought into a bank. In that time, it might be vulnerable to misplacement or theft.
With this in mind, the alternative of paying through software that is equipped with thorough and up-to-date encryption technology that protects from any cyber-attacks or hacking, money has practically no chance of being mishandled. All in all, using property management software is essentially another layer of protection.
More Work for Your Tenants
You’re running a rental business and your tenants are your clients. You want to make sure that you’re keeping them happy. One way to improve their user experience is by making the process of paying rent a little easier. The process of paying with paper methods involves the delivery of cash, a check or a money order rent payment either through drop-off or the mail.
This isn’t necessarily the most strenuous job in the world for them, but property management software offers options that are even easier. The ability to set up automatic rent payments—also called ACH payments—that withdraw from a tenant’s bank account means that the job of paying rent is practically no work for them.
More Potential for Late Payments
Late or missing rent payments are a headache for you as a landlord. More than likely, you rely on the funds that you get from rent to sustain your rental business. Fortunately, the flexibility of paying rent through property management software means that it is much less likely for a tenant to simply forget to pay their rent on time.
With paper solutions, there is a buffer between when a tenant goes to pay rent and when it actually reaches you. So, for instance, if a tenant remembers to pay their rent on the day that it’s due, there is a chance that it still won’t reach you on time. It may take some time for it to get through the mail, for example. With online rent payments, there is no buffer between paying the funds and them becoming visible to you, which keeps last-minute payments from turning into late payments.
Also, if they are using automatic payments, the factor of the tenant forgetting to pay is irrelevant.
More Work for You
When you receive a cash payment, your first job is to start making records of the transaction for future reference. This is a manual process that can take a lot of time and effort and, with the advent of property management software, is not really necessary. Online platforms automatically generate records the moment that a payment is made, which both saves you time and prevents the risk of human error.
Additionally, a tenant also receives a copy of these records in the form of a rent payment receipt. This adds a layer of transparency to the transaction, giving them access to records that they can refer to that might help prevent future disputes over payment. If a tenant is using automatic ACH rental payments, these records are also a good regular reminder that their money is going to the right place.
Conclusion
Paper rent collection methods have their respective benefits, but they pale in comparison to the number of benefits that online methods can provide both you and your tenants. For any landlord, monthly rent collection is a rental business’ largest source of income, so it’s worth it to take steps to ensure the process is smooth, flexible, and effective as possible. The best way to do that is to take advantage of accessible property management software.
