Rent collection is one of a landlord’s most important jobs. Doing it well is crucial in running a successful real estate business. Inefficiencies in rent collection interrupt your cash flow, seriously hurting your business and source of income.
Taking the time to figure out how you can improve your rent collection processes is well worth the trouble. To make things easy, let’s start with one critical fact: paper checks have to go. With all of the software, alternative payment methods, and more efficient technologies, it’s time to say goodbye to paper checks. Don’t believe me? Here are 6 reasons online rent collection beats paper checks:
- Less Late Payments
- Simpler Process
- Multiple Payment Methods Available
- Quicker Processing
- Automatic Records
- Landlord-Specific Services
Below, we take a deeper look at each of these reasons for switching to online rent collection. If you aren’t convinced yet, you will be soon.
#1 Less Late Payments
The biggest way paper checks stand to hurt your property management business is through late payments. When tenants pay via checks, they have to remember to write one out and get it to you every month. No one’s perfect, so they’re bound to forget at some point. It may seem like no big deal, but late payments add up to seriously affect the health of your cash flow.
Many online rent collection tools allow tenants to automate payments. This way, they can set it and forget it, and your payment shows up on time every month. What’s more, any good property management software will allow you to set automated reminders to go out to tenants before their rent is due. With these two features, you should never have a late payment again (ha! Tenants will find a way).
#2 Simpler Process
In case you need a refresher, let’s go over the steps it takes to get a paper check into your bank account. First, tenants have to remember to write the check and deliver it to you. If their delivery method is the postal service, go ahead and 2 days to the process. Next you have to make a trip to the bank to deposit it. You have a busy schedule, so there’s no telling when you’ll have the time to get over to the bank. Lastly, you have to wait another 2 business days for the check to clear — and that’s if it doesn’t bounce.
We can do better, and it starts with online collection. You may think that switching to online collection will create confusion for your tenants, but chances are they’re already paying other bills online. Why not rent? Online collection tools make the process simple, quick, and easy. The ability to set recurring payments is truly invaluable, and it’s not an option with paper checks
#3 Multiple Payment Methods Available
Paper checks can never be anything more than a check. With online rent collection, however, tenants can often choose their preferred method of payment. Most property management software platforms, as well as online bill pay, let tenants choose between paying via credit/debit cards or ACH payments that pull directly from their bank accounts. Online payments can work for everyone.
#4 Quicker Processing
As we discussed in #2, it takes days between when a tenant writes a check and when the funds are available in your bank account. Most forms of online payment allow for quicker processing, improving the health of your cash flow. Some property management software will even deposit payments after as little as one business day.
#5 Automatic Records
A major drawback to paper checks that we haven’t touched on yet is the bookkeeping. When you collect rent via paper checks, you have to manually write out receipts and input payments for your records.
With online rent collection, it’s all done automatically. Property management software allows you to easily see which tenants have paid and when their payments process. The best part is that all of this is automatically updated in your records, which can easily be exported when needed.
#6 Landlord-Specific Services
The benefits of property management software don’t stop with rent collection. Most management platforms also offer online lease signing, tenant screening, maintenance request portals, and tenant management services. If you want to seriously improve your real estate business, the best thing you can do is find a property management software that works for you.
Now are you convinced? It’s easy to see how online rent collection is superior to paper checks. In fact, the only advantage paper checks really offer is that they’re familiar. In today’s day and age, however, you would be surprised to know just how many of your tenants are paying bills online. For the success of your real estate business, it’s time to make the switch.