Are you a landlord considering whether to accept cash payments for rent collection? While collecting rent in person may seem simple, there are actually several advantages to collecting rent payments online.
Many landlords are switching to digital forms of payment to collect rent payments online and keep track of each transaction to mitigate the inherent risks in financial operations.
Why Cash Isn’t Always Safe?
There is always a slight risk in dealing with cash transactions. It can be challenging to prove that the total rent amount has been received and to settle any disputes that may arise if there is no formal cash policy. Even though using signed receipts and detailed records of all cash transactions can help reduce miscommunication, it's still important to understand the potential risks.
The inconvenience of dealing with cash transactions is another reason to avoid them. It's frustrating for landlords and tenants alike that bank transactions can take up to six business days to clear. Switching to digital payment methods will eliminate these hiccups and streamline the rent collection process.
Accepting cash for rent collection can sometimes increase cash on hand or reduce delays but moving toward digital forms of payment is recommended. By doing so, landlords and tenants can reduce potential harm, boost productivity, and streamline the rent collection process.
Alternatives to Cash for Rent Collection
Instead of accepting cash or checks, landlords can set up an online platform or system through which tenants can make payments using a credit card or bank account.
TenantCloud users can collect rent payments from tenants online using an efficient payment processing system powered by Stripe. The system accepts ACH transactions as well as credit/debit card payments.
Online rent collection provides landlords with a convenient and efficient method of collecting rent from tenants. Landlords can easily set up online payments, track and manage transactions, and access financial reports and other information to help them manage their properties using secure platforms. This can be a more secure and efficient option than traditional methods, such as accepting cash or checks.
Benefits of Online Rent Collection
Online rent collection is a great option to consider if you're a landlord looking for a beneficial and efficient way to collect rent. Here are the top five reasons why you should collect rent online:
- Convenience: Online rent collection is convenient for both landlords and tenants. Landlords can easily use the platform or system through which tenants can make payments, and tenants can make payments at any time from any place using any device.
- Efficiency: Online rent collection is more efficient than outdated methods like cash or checks. Payments are processed instantly, so landlords don't have to wait for paperwork to clear or worry about lost or stolen cash.
- Security: Online rent collection is safer. Payments are processed through secure platforms or systems, which can help protect against fraud and other security risks. Cloud-based software systems used to store accounting or other sensitive information should have a secure protocol in place. At TenantCloud, we use 256-bit encryption through SSL and store user information in highly secure AWS data centers.
- Tracking and management: Online rent collection allows landlords to easily track and manage transactions in one place. This can be particularly helpful for landlords who manage multiple properties or tenants.
- Tenant preferences: Many tenants prefer to make payments online, and offering this option can make it easier for tenants to pay their rent on time.
What’s the Best Way to Collect Rent as a Landlord?
TenantCloud is a property management software that offers landlords online rent collection. TenantCloud allows landlords to set up online rent payments, track and manage transactions, and communicate with tenants all in one place. This can be a convenient and efficient option for landlords, as it eliminates the need for traditional methods such as accepting cash or checks, which can be time-consuming and carry certain risks.
Another advantage of online rent collection is tracking and managing transactions. Landlords can easily view and track rent payments and access financial reports and other information. The rent reporting feature allows tenants to report their rent payments to credit bureaus. This can help them improve their credit scores, access better loan terms in the future, and make tenants consider renting from landlords who accept online payments.
Related: Rental Property Accounting Tips: The Ultimate Guide to Creating Powerful Landlord Reports
Alternatives to Cash
Since cash payments are difficult to document, let's consider alternatives to traditional payment methods. If your tenant doesn't have a bank account (which some still have trouble securing), a money order or a personal check can work. Money orders are available at post offices and drugstores. They can also be sent via email, but the tenant should be aware that they must pay for the money order every month.
A personal check may be an old-fashioned way to provide transactions; however, some landlords prefer this method for receiving rent payments.
Property management solutions provide online payment options, which appear to be the most effective way to collect rent online. In your TenantCloud account, you can see the due date and the amount owed. If tenants fail to pay their rent on time, they will receive notifications and notices outlining how much they owe and when late fee invoices will be generated. You also save time because funds are deposited directly into your bank account.
If you're still accepting cash payments, you should consider switching to an online payment system to make life easier for you and your tenants.
Related: Best Way To Collect Rent Online: Encourage Your Tenants To Try It
What methods do you use to accept rent? Do you collect rent online? Are there any recommendations you'd like to share? Leave a comment below - we'd love to hear your thoughts on the topic. :)