When you’re managing a property or renting out your home while living somewhere else, one of your top concerns will be ensuring you receive your rent payments on time. While most tenants pay on time, it can be a difficult issue to approach when you’re waiting on a late payment, and it can also end up costing you a significant amount of money.
A great way to avoid this issue is to consider the best ways to collect rent as a landlord. You might currently be using simple bank transfers or debit card payments, but there are actually a variety of different methods you can choose when you’re taking rent payments from a tenant. Keep reading to find out more about the best ways to collect rent and the different factors that you should consider.
Factors to consider when deciding the best ways to collect rent as a landlord
There is not a single easy way to collect rent, as this will depend on the specifics of your property and how you want to manage this. Therefore, you should consider certain things before making your decision. These include, but are not limited to:
The number of properties that you manage. Are you a landlord for just one property, or do you hold a portfolio of properties? Ease of use and automation becomes more important when you manage several properties.
How far away do you live from the rental properties? Are they easy to access?
How much interaction do you want to have with the tenants?
Are you comfortable using technology to collect rent payments?
Whichever method you choose, remember that you should keep clear records of all the payments. This will make things easier for you when it comes to making your tax payments.
Traditional payment methods
Traditional payment methods include paper checks and payment in cash. While they may have been considered an easy way to collect rent payments in the past, there are a number of limitations to them.
For example, it can take a significant amount of time for a check to clear, which can have a negative impact on your cash flow. Cash payments can be risky as they are much more difficult to document, which means that they are also easy to dispute. It’s difficult for you to prove that a tenant has not made a payment when you accept them in cash.
Best ways to collect rent online
As more and more payments are made electronically, many landlords are now looking for the best ways to collect rent online. There are a number of such online payment methods that you can consider, which include:
Using ACH electronic transfer. This involves using the ACH (automatic clearing house) network, which is a secure and fast method of transferring funds. There is a one-time setup where tenants will provide their payment details and authorize automatic payments, and these will arrive in your account on the day of your choosing.
Payment apps such as PayPal and Venmo, which are quick and easy to use, and also provide high levels of security thanks to encryption.
Digital wallets, such as Apple Pay. These payments are convenient to make, as the tenant simply requires your phone number.
Using GoCardless to collect rent
GoCardless helps to provide one of the best ways for landlords to collect rent electronically. Using the previously mentioned ACH debit transfer method, GoCardless can be used to automatically pull payments from the tenant’s account on the agreed date, meaning you don’t have to worry about late payments.
This puts landlords in control of the payments rather than relying on the tenant to make the payment themselves. There is also the chance to adjust the amount, such as if the rental payments increase year on year. There is also integration with Success+, an intelligent payment solution that automatically attempts to retake failed payments.
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.