We look at the pros and cons of collecting rent online versus more traditional methods like cash or check.
Collecting rent isn’t always straightforward. Having the right processes in place and utilizing the right tools can help you optimize your rent collection process so that you avoid late or missed rent payments while simultaneously saving you time.
In this article, we look at the pros and cons of collecting rent online vs. more traditional methods like cash or check.
Cash can go missing. And if it does go missing in transit there’s no way to get it back, it’s gone.
The majority of staff are honest. However, if there are others you employ who might have access to the thousands of dollars of cash coming your way each month, you might find the temptation is just too much for them.
Many gainfully employed people receive parts of their salary in cash. Restaurant staff tips being one common example. However, there is also a risk that their employment and the source of the cash is more nefarious.
Sometimes there is no other option. At the end of the day, cash is better than nothing.
A bounced check or failed online payment could take several days to realize. Plus you can make sure the full amount is there before depositing ensuring there will be no partial payments.
Ultimately, the cons of collecting cash payments for rent outweigh the pros. It’s an inefficient, insecure way to collect rent that could easily lead to greater difficulties and issues down the line.
Depending on the service you use there could be various fees and or transfer limitations. For example, an ACH transfer could cost as much as $35. And reclaiming that fee from your tenant through a convenience fee may not be legal in your state.
There are also some other risks to consider. For example, your tenant may dispute a charge to their account, and often payment providers side with the customer.
Additionally, with online payments, there is a risk that a tenant might send only a partial payment which you can’t block. This could derail any eviction proceedings currently in process as you will be seen to have accepted a rent payment.
The major benefit of online rent collection is that the ease and convenience often results in a reduction in late and missed late rent payment. There’s no more, "I forgot", from tenants, because with software like Landlord Studio they can simply set up automatic rent payments that recur every month.
ACH payments can take up to 5 days. However, there are other options that allow for instant transfers. One of the future updates to Landlord Studio’s online payment portal will be implementing instant transfers. Plus because the funds go directly from bank to bank there is no chance of the money getting lost or being stolen. It’s 100% secure.
It’s a more convenient process for everyone. As such it improves tenant relationships – you no longer have chase payments. This in turn frees up time to concentrate on improved customer service and showing vacancies.
It lowers costs and removes the need for constantly chasing and processing payments. Plus, with Landlord Studio you can automatically track your rental income removing hours of admin every month for your income and expense tracking.
With digital reconciliation through Landlord Studios bank feeds paired with automatic reconciliation there is no chance of inputting a payment incorrectly, removing costly and time-consuming accounting errors.
Collect rent through the Landlord Studio App and have the rent automatically reconcile in our software. Create automated rent invoices and receipts, and allow your tenants to easily pay their rent through our online portal straight into your bank account.
Zelle is one-way landlords are making rent collection easier, more secure, and faster for both themselves and their tenants. Most major banks participate in the Zelle network so if your tenant has a bank account it’s likely that they can pay easily and simply using Zelle.
Venmo allows you to send and receive money quickly and easily through their app to people on your contact list. You can quickly connect to people through social media, or, like Zelle, you can use their email or phone number if they already have a Venmo account. Although it’s not designed for collecting rent you certainly could use it that way.
Read our Article: Best Ways To Collect Rent Online