Last editedMar 20232 min read
The problem of late rent payments and rent arrears is something most landlords will encounter at some point, but it can be avoided with an automated rent payment system. Knowing how to set up automated rent payment can ensure your due rents are paid on time, every time.
Buy-to-let investments can be very rewarding when everything goes right, but every landlord knows that keeping it that way is not always an easy task. For one thing, landlords don’t have control over how their tenants manage their finances. Even some honest folk may overspend on something and mistakenly presume they can adjust the rent amounts for a brief time. There will also be some people who actively seek to take advantage of their landlord’s perceived wealth by purposefully making late rent payments or missing them altogether.
With rent payment automation, such issues are avoided entirely as the rent amount is automatically pulled from the tenant’s account on the date agreed upon in the tenancy agreement.
Automated Rent Payment Benefits
The main benefit of automated rent payment is of course the aforementioned elimination of late rent payments, but there are other advantages too. These rent payment automation benefits include:
instant and easy accounting
Instant and Easy Accounting
Knowing how to set up automated rent payment will provide you with a system that makes tracking payments much quicker and easier. Cash and cheques make tracking payments slow and cumbersome with lots of potential for human error. Even electronically recorded bank transfers are a pain to sort through should any disputes arise, as you will need to review a great deal of online banking data to find the information you need.
With an automated payment system in place, all rent payments will be recorded, tracked and easy to identify as and when needed.
A potential tenant’s enthusiasm for rent payment automation can be an indicator of whether or not they’ll be a good or bad tenant. The fact is that an automated rent payment makes their lives significantly easier than if they have to initiate a bank transfer every month or withdraw cash and hand it over in person. So any lack of willingness to automate the payment process could be a sign that they are liable to make late payments or miss them entirely.
There may be other reasons, of course, like simple ignorance as to how payment automation works, but these reservations can easily be identified and discussed.
By eliminating the possibility of late payments, you actually increase the likelihood of tenant retention. This is because a frequent cause of problems between landlords and tenants is indeed late or missing rent payments.
With an automatic rent payment system in place, this common cause of friction and disputes will no longer be possible.
Automated Rent Payment Collection
The most common rent collection interval is monthly, as this usually correlates with a tenant’s monthly salary payments. Not everyone fits neatly into this schedule though, especially with the rise of the gig economy and freelance workers receiving payments at essentially random intervals. An automated payment system allows each tenant and landlord agreement to be flexible and organised according to each unique circumstance, without creating extra administrative work for the landlord.
With rent payment automation, it is possible to increase payment intervals to bi-weekly or weekly, with the rent amount calculated accordingly. With an automated payment system pulling the payments, there is also no extra burden on the tenant to make more frequent payments.
We can help
GoCardless is perfect for recurring payments and rent payment automation, and is ideal for landlords or property agents and their tenants. Our real-time bank payment programme PayTo is also perfect for one-off amounts such as the initial deposits tenants must pay to landlords prior to moving into the property.
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.