The two most important factors in managing a property are ensuring its value is protected and maximised, and making sure rent is paid in a timely, efficient manner. With so many ways to collect rent payment, it can be difficult to decide which system works best for you.
The best rent collection method will depend on a few different factors. Read on to learn about the five best ways to collect rent from tenants.
If you trust the tenants, you can simply ask them to deposit the correct amount into your account each month. They could do so online, or at their bank, and the money should arrive in your account fairly promptly. The downside of this, is that you have to rely on your tenant to make payments on time, each month. You can send reminders as the due date nears, and ask them to notify you once they’ve made the deposit, but this just means a lot of extra, regular admin.
If you live locally and would prefer to have face-to-face interaction with your tenants, you could always arrange for payments to be made in person. You might choose to do this at the property itself, or at a different location that works for both parties. Collecting rent in-person at the property will afford you the opportunity to monitor the condition of the property regularly. Not every tenant will be open to monthly inspections and in-person payments, so if this is the method you wish to take, make sure to be clear about this from the start, and include these terms in the tenancy agreement.
If you’ve experienced property damage from tenants in the past, you might find it brings some extra peace of mind to visit the property each month to collect rent. It is important to remember, though, that unless you’re taking payment by cheque, you’ll be handling a lot of cash when collecting rent in person, which could make you vulnerable to theft.
Some property managers may prefer to collect rent via mail. This is less common nowadays, but if you’re apprehensive of managing payments online and cannot or don’t want to collect rent in-person, mail payments can certainly be a viable option – when done right. Payment by mail can lead to delays or other issues. The tenant may send you a cheque for the wrong amount, and you won’t be able to rectify the issue until the cheque arrives days later. It also opens up the possibility of dishonesty. Your tenant can simply tell you the cheque was lost in the mail to avoid or delay a payment.
If you’re asking to be paid by mail, it helps to use pre-addressed, stamped envelopes with certification from the post office, and where possible use a tracking service to ensure the payment was sent when the tenant says it was sent.
Online Rent Collection Software
Collecting rent payments online is perhaps the most efficient method – and there are a few different ways to do it. One solution is to use an online rent payment service. Platforms like DoorLoop, RentPay, Simple Rent, and RealRenta are designed specifically for rent payments, but if you don't need all of the added features of rent management programs, a simple automatic invoicing platform or payment collection service like GoCardless will suffice. Each platform will offer different benefits and features, so take some time to look over the options.
Setting up a direct debit might be the best way to collect rent online, ensuring you’re always paid on time, without any extra admin. Direct debit is a pull-based method of payment. You’ll set up an arrangement with the tenant for the rent amount to be drawn from their account and transferred to yours automatically on a specific date each month. Once it’s set up, neither you nor the tenant will need to do anything – the funds will move automatically on the date you’ve sent. Should the tenant have insufficient funds to make a payment, you’d both be notified ahead of time.
GoCardless is a fantastic option for timely automatic payments – making it a great solution for collecting rent. Setting up a BECS direct debit via GoCardless helps businesses reduce the time it takes to get paid, and gives property managers more control over the payment. You won’t need to rely on the tenant to make payments on time, it’ll all happen automatically.
Alternatively, your tenant can set up a standing order for payment to be made automatically on a specific date each month. Standing orders are a form of automatic payment, but they’re not the same as direct debit. A direct debit is where the tenant gives a business permission to withdraw funds from their account on an agreed date. The amount can change month-to-month, but the tenant must be notified about this ahead of time. On the other hand, a standing order is set up by the tenant themselves with their bank. In a standing order, the tenant instructs the bank to pay an exact amount to another account on a regular basis.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.