Rent collection is incredibly important for your rental business, so it’s important to consider what the best method of rent collection is for you. There are traditional methods like collecting cash or checks, and there is also more contemporary property management software in which rent payment and collection both take place entirely online.
At first glance, accepting a cash rent payment might seem like the best choice – it’s simple and traditional. However, when compared with the benefits of online rent payment, there many ways in which cash payments fall short of being as efficient, flexible, and effective as rent payments could be. Let’s take a look at five reasons why you should avoid accepting cash rent payments.
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Cash Can Be Mishandled
The more tenants you have, the more significant this issue can be. Collecting bills from every tenant whenever rent is due means that you need to have a place to store cash while you make records of the transaction. Until you deposit it into the bank, physical cash is vulnerable to theft or can simply be lost.
In contrast, property management software handles and stores the money for you, cutting out the need to store money or eventually visit your bank. Encryption software in the transfer of money also ensures the safety of both you and your tenants from the threat of cyber-attacks or hackers.
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Less Flexibility
When it comes to a tenant getting cash into your hands, both them and you have less flexibility in terms of what that process looks like. Cash needs to either be mailed or delivered to you by hand, neither of which is a very flexible method.
Compared to online platforms, these methods take a lot of time and are considerably more restrictive. Property management software allows tenants to pay their rent wherever they get a reliable internet connection. If they have a mobile app version of the platform, they can even pay their rent on the bus ride to work. Similarly, once a payment is submitted, you can view it from anywhere.
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There’s More Potential for Late or Missing Payments
Because a tenant can submit their rent payment from anywhere using property management software, the process also becomes a lot quicker. Online payments can be viewed right away. Compare this with sending cash in the mail. If a tenant forgets to mail a payment until the day it’s due, there is a much higher chance that they are late with rent.
When tenants pay rent online, they are able to set up automatic payments that withdraw funds directly from their bank accounts every month. Once these are set up, automatic payments ensure that your tenants are always paying on time. This protects them from late fees and you from the responsibility of tracking down tenants to pay them.
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More Accounting Work
As mentioned previously, it’s important to keep records whenever a transaction is made related to your business. This includes rent payments. Whenever a cash rent payment is made, you will have to manually update your bookkeeping. Depending on how many tenants you have, this can take up a lot of your time.
Fortunately, property management software automatically generates records for you every time a payment goes through. This means you have more time that you can spend improving other elements of your rental business.
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More Risk for Error
Manual bookkeeping not only takes a lot of time, but it is also susceptible to human error. A mistake in your records could lead to disputes with your tenants that could get you into a lot of trouble. So, it’s significant that when a payment goes through on property management software, the records that are automatically generated are also dependently accurate.
Additionally, tenants who pay online through your property management software platform receive a rent payment receipt. Access to these records is another way of preventing any sort of dispute between you and your tenants over rent payments.
Conclusion
Collecting rent with cash can be messy, unreliable, and cost you extra time and effort. Fortunately, a high-quality and beneficial alternative exists and is widely popular in the rental industry. If you are still relying on traditional methods of rent collection, switching to online methods will help make one of the most important parts of your job both more effective and much easier.
