Being able to pay rent online is still fairly new. Even though a lot of large apartment complexes have implemented it, the vast majority of landlords still aren’t using this great tool.
Here are a few reasons why you should consider moving to a system that allows your tenants to pay over the web, along with a few drawbacks to consider.
Benefit #1: Easier for Everyone
Let’s say you collect rent on the first day of the month. If you have 10 different tenants, you’re dealing with 10 checks and credit cards each month! If you have more tenants, obviously this problem scales quickly.
Not to mention the inconvenience to your tenants. Even if they just mail in the check, it takes time for them to write it out, get the stamp and envelope together, walk down to the mailbox, etc.
Instead, allowing tenants to pay rent online will save you processing times and preparation time for your tenants. Some systems also allow automatic payments, making it even easier than a manual one.
Benefit #2: Built-in Documentation
Even though checks and credit card payments have some documentation, it’s more on the bank’s side than your own. For you to record the transaction takes extra effort, plus there’s a chance it can get lost.
Collecting rent online fixes this issue, as it will track when the payment comes in, what credit card was used, and the rest of the critical information immediately. So if there is some kind of dispute, you can easily pull it up to prove whether or not payment was made on time, what credit card was used, etc.
Benefit #3: Accounting Made Easy
Bookkeeping and accounting can be tedious, but having everything recorded and processed digitally makes the accountant’s life much easier. When your tenants pay rent online, the built-in documentation will help your accountant and auditor close the books much more quickly each month. And less time for the accountant means more money you get to keep in your pocket!
But even though this kind of system has some great benefits, there are a few drawbacks to think about before making the investment.
Drawback #1: Upfront Cost
Investing in software generally has an upfront cost to consider. This cost is both the financial cost to setup the system, as well as the time investment necessary.
Most of your cost savings (from less accountant and payment processing times) will be on the backend, so the long-term investment may be less profitable in the short term.
Drawback #2: Learning Curve
Even though software has come a long way and most of it is fairly self-explanatory, it can take a while to learn the system. Also keep in mind that even if it doesn’t take long for you to learn how it works, your tenants may need some training to help them pay rent online without getting frustrated and resorting to the old methods.
Drawback #3: Maintenance
Anytime you add a more complex system to a process, the risk of something going wrong increases. Keeping your online payment software updated is something you’ll need to stay on top of, and there’s still no guarantee it will work 100% of the time! Even though the manufacturer or service provider will likely do everything they can to help, you can expect hiccups every once in a while, just like you probably do with other software programs.
At the end of the day, there’s no perfect solution to collecting rent. But when you let tenants pay rent online, the long-term investment far outweighs the short-term cost and inconvenience.