Transitioning to digital management is a smart move for most rental business owners. Property management software offers many tools and features designed to suit unique landlord and tenant needs.
Online rent collection is one of these features. This feature replaces traditional cash or check payments with digital payments via debit, credit, or ACH (Automated Clearing House) transfer. With several options to choose from, tenants can make payments directly from their computer or mobile device.
If online rent collection is new for you, you may have some immediate questions or concerns. How do you best navigate digital payment environments? What should you do when problems arise?
To fill in some of these gaps, here are five best practices for using online rent collection in your rental business.
- Automate Late Fees
You’re no doubt familiar with the challenges of enforcing late fees. You need to hold your tenants accountable to the lease terms, but it can seem pointless to waste time and energy tracking down a minor fee. Often, a tenant will pay the initial amount owed but conveniently forget the incurred late fee, a habit you shouldn’t tolerate.
This is where property management software comes in. Online rent collection features allow you to automate late fees. Your software will automatically push late fees to any tenants’ accounts who haven’t paid their rent by a certain date or after a designated grace period.
Your software can also prohibit a tenant from paying next month’s rent until tenants pay the previous bill (with all fees) in full.
Automated late fees are an excellent way to keep your tenants accountable without your direct involvement. You can enforce the lease terms without being the “bad guy.”
- Encourage AutoPay
A second good practice for online rent collection is encouraging tenants to use AutoPay. AutoPay allows tenants to link their bank accounts to the software, which automatically withdraws funds each month when rent is due.
AutoPay ensures on-time payments, so neither you nor the tenant needs to worry about late fees.
The only downside to AutoPay is the possibility of a bounced payment if a tenant doesn’t realize they lack the funds. Because online payments are generally faster (most ACH Transfers are complete within one to three days), you’ll know about any problems as soon as possible.
- Emphasize Security
If you’re new to property management software, you’ll likely have tenants who are too. Some tenants may be concerned about the safety of online payments as opposed to traditional cash and checks. What should you tell them?
If a tenant inquires about digital payment security, you should be ready to explain that digital payments are far more secure than traditional ones. In addition to having the protection of modern encryption, digital payments are far less susceptible to theft, misplacement, and disorganization.
Reassure your tenants that online rent collection is the safest method of managing transactions. And if they’re still unsure, give them the contact information for a customer service representative from your property management software company. These representatives are well prepared to answer questions about security and explain how the company protects and stores data.
- Use Digital Record-Keeping
You (or your accountant) may be accustomed to keeping your own accounting books. Manually recording rent payments may give you a sense of control, but it can quickly become tedious and problematic. Paper records are vulnerable to clutter, misplacement, theft, and accidental destruction.
Instead, take advantage of your property management software’s record-keeping tools. Your software will automatically generate digital records each time a tenant makes a payment, logging critical information like date and time, payment method, and amount.
If a problem arises, it’s much easier to consult a digital record than dig through file cabinets or paper ledgers.
- Automate Rent Receipts and Reminders
A final best practice for online rent collection is to utilize automatic messaging. Rather than manually sending rent receipts and reminders, your software automatically sends them to the appropriate tenants.
Not only will tenants receive instant verification that their payment was received, but they can also keep track of important due dates without the extra time commitment on your end.
Achieve Digital Dexterity in Your Rental Business
Although transitioning to digital management is a significant step, property management software makes the process as streamlined as possible. If you follow these five basic tips, you will quickly wonder how you ever managed without online rent collection.
