Why You Should Accept Rental Payments Online
Did you know that most landlords rank payment issues as their top concern when it comes to the job? Above eviction history and even criminal activity, problems with rental payments are routinely ranked as the number one struggle for landlords on the job. For anyone who’s had to hound tenants for rent, this news is not exactly new. But there might be some genuine surprise when it comes to asking why–the number one reason most Americans have paid a bill late is simply that they forgot to do so.
It is this very reason why most successful landlords prefer to collect rental payments online. More often than not, it’s more convenient for tenants and makes less work for landlords. Follow along as we outline the five major reasons why you should be collecting rental payments online.
You Can Schedule Recurring Rental Payments
Convenience is king when it comes to getting anybody to do anything–the easier the better– and one of the most convenient aspects of an online payment system is the option for scheduling recurring rental payments. This takes the ease of use up another notch, and relieves both you and your tenants of the hassle of remembering and reminding every month of the year.
While some older tenants may prefer sticking with analog payments, electronic payment systems have long since established trust and acceptance for most folks. As the population ages, the idea of juggling paper checks, envelopes, and stamps will seem increasingly alien to younger generations–the people most likely to be your tenants. So, we know that it’s easier for most folks to hop on a computer or simply use the phone that’s already in their hand; roughly half of all Americans already pay their bills online, and the number is always growing. The ability to schedule recurring payments makes it all that much more convenient. The tenant can feel confident that their payments are made on time, and the landlords can focus on more productive work, rather than rushing around to make sure everyone gets a check sent.
If you’re still waiting on paper checks from some or all of your renters, there are significant downsides. The process involves waiting for the mail, driving, or walking to pick the check up from the property. Then you’ll need to get to the bank to make deposits. Finally, you’re manually recording every payment in your accounting software–or worse, paper ledger). With recurring online payments, most of the work is done automatically.
Decrease Late Rental Payments with Reminders & Other Options
Beyond the ability to schedule recurring payments, an online system will allow your tenants to use a multitude of payment forms and set reminders for when rent is due. It literally puts more power in their hands while making the whole process easier.
First of all, even with recurring payments, many people prefer to have notifications about when their bills are due. It keeps them accountable and aware and can even help determine when to make big purchases that could impact their bank account. But even more than this feature, the range of payment options are what makes online payment the more attractive option for renters.
An online payment system will allow your tenants to deposit rent directly into your bank account, crucially without giving them access to your banking information. In almost every case, rent payments are transferred to your account via the ACH Network. This is the payment network that processes financial transactions for consumers and businesses alike in the US, in addition to government payments. Standing for Automated Clearing House, ACH transfers credit for payroll deposits, Social Security benefits, tax refunds, and much more.
This system allows for payment via websites, phone calls, text messages, and now mobile apps. Even better, depending on the platform you use, your tenants can pay via debit card, credit card, PayPal, eChecks, and even cash at certain local grocery stores. There are so many more options that make it far easier for tenants to get their rental payments in on time.
You Can View the Status of Rental Payments in Real Time
Another great advantage of online rent payment is that you’ll have instant, automatic digital documentation of all payments, allowing you to skip most of the paperwork. Additionally, many popular services allow for easy importing to any accounting software you may already use. So once again, you’re given more time to focus on other important aspects of landlord work.
Online payment platforms also provide instant notifications when money gets deposited into your account, giving you peace of mind and better visibility about the rent status across your properties. You can know exactly when payments get made, whether you’re actively working in the office or not.
Helps You Streamline Your Property Management Operation
As we’ve mentioned a couple times already, many of the advantages of online rent payment boil down to making your job as a landlord easier and more streamlined. One especially notable example would be that, with an ACH processed payment, you’ll receive status updates in real time. This means that, instead of relying on your tenant’s word that they mailed the rent check on time (and possibly hearing the dreaded “maybe it’s lost in the mail”) you’ll know exactly when the payment is received, processed, and then deposited into your account. Plus, it’s usually much faster than the time required for a check to be delivered, deposited, and then cleared by the bank.
Our final point is perhaps the most important when it comes to the big picture–online rental payment is simply more secure for both you and your renters. For the tenant, it means no more concern over possibly lost or stolen checks and far less worry about identity theft. Remember that the front of a check contains bank routing and account numbers, but prying eyes cannot see that information in a discreetly processed online payment. This sense of security goes both ways, as you’ll have more confidence knowing that there’s virtually zero chance of a rental payment being intercepted before it can be processed.
Here Are Some Great Online Payment Systems
While there are many companies offering online rent payment options, the solutions from the following property management services are some of the best available:
Avail – This platform gives the landlord the flexibility to set up custom monthly rent and due dates for each tenant. Plus, you can easily set up late fees and security deposit payments.
Buildium – This is a sleek rent, bill, and fee collection service that claims to cut processing time by up to 70%. More concretely, they have an easy to use recurring payment setup for tenants.
ClearNow – This platform offers a simplified rent collection service that will deposit rent payments directly into your bank account.
Cozy – This is an attractive solution for streamlining and saving money, as its rent collecting is free for landlords. Tenants simply choose to pay rent for free with a checking account use a credit or debit card for a 2.75% fee.
eRentPayment – This platform allows for easy one-time or recurring rent payments. The best feature, however, is that it’s just one function of a full property management toolset for landlords. In addition to rent payments, you get tools for tenant screening, maintenance scheduling, and more.
RentPayment – This solution uses the YapStone payment processing platform to allow for single and recurring payments, seamless integration with popular property management software, and provides multiple payment channels, including in-person, phone, mobile, and online.
TurboTenant – This software is similar to eRentPayment in that it’s an all-in-one solution, allowing renters to pay online in addition to a suite of functions including property listing, marketing, tenant screening, and other useful landlord tools.
RadPad – This is an interesting option for a very specific scenario: Use this service to allow tenants to pay with a credit or debit card; RadPad then mails a paper check to you for deposit.
Most of these platforms do not charge you as the landlord, instead allowing their cost to be passed on to the tenant as part of their rent payment, or allowing you to split the costs between the tenant and you. Even better, some platforms will show the renter’s payment history to one or more of the three credit bureaus, which can help them establish and maintain a good credit rating. Bonus!
Disclosure: This Knowledge Base article is accurate as of the last update. Laws and policies are subject to change. If you have any questions, please call the office. Click here for contact information.