{"id":127839,"date":"2020-07-22T15:16:54","date_gmt":"2020-07-22T21:16:54","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=127839"},"modified":"2021-03-16T17:01:27","modified_gmt":"2021-03-16T23:01:27","slug":"online-rent-collection-beats-paper-checks","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/online-rent-collection-beats-paper-checks","title":{"rendered":"7 Undeniable Reasons Online Rent Collection Beats Paper Checks"},"content":{"rendered":"

Landlords rely on their tenants paying rent on time to run a successful business. Paper checks are the traditional way by which landlords collect rent. But there are many reasons for landlords to switch to online rent collection.<\/p>\n

Unfortunately, many tenants view landlords as money-grabbing people who are only concerned about collecting their checks. The reality is that landlords\u2019 primary source of income is money from their rental properties\u2014so they are rightly concerned about tenants paying rent on time.<\/p>\n

The lease agreement that tenants sign clearly outlines the date for rent payments and the method of payment. Successful landlords also carry out a thorough screening process<\/a> to ensure tenants can afford to pay rent and have a good credit history. Because rental income is crucial to running a successful business, property managers<\/a> should ensure they have a robust and secure method of collecting rent.<\/p>\n

Modern technology allows for a significant number of rental payment options. According to a report<\/a> by the Federal Reserve Bank of Boston, 42% of people still prefer to pay rent by check. The survey showed that in 2014, only 7% used an online banking payment.<\/p>\n

On the other hand, many companies emphasize the need for switching to online rent collection methods. Online rent collection helps landlords run a successful property management business, ensure healthy cash flow, and receive rent payments made on time.<\/p>\n

Thankfully, in less than a decade, technology has advanced so much that online rent collection is slowly becoming more appealing for the landlord and the tenant.<\/p>\n

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Why Are Checks Such a Bad Thing?<\/h2>\n

There are two principal reasons why checks are a nightmare payment method for both parties. On the one hand\u2014and often unintentional\u2014checks are easy to forget. With so much going on in most people\u2019s lives, rent day slips past like any other day.<\/p>\n

Also, bills come on various days of the month. Of course, it would be easier if everything was due at the same time. A tenant could sit down and quickly write checks for all the bills. But if it\u2019s one here and another there, it is easy to get caught up in the stresses of life. And, it can be easy to forget to send the check.<\/p>\n

Related:<\/em><\/strong> The Landlord\u2019s Ultimate Guide to Collecting Rent<\/a><\/em><\/p>\n

Then there are the intentional problems with checks\u2014checks bouncing and check fraud. If convenience isn\u2019t enough to motivate you to change your payment method, you only need to look at some of the shocking fraud statistics concerning checks.<\/p>\n

News reports<\/a> say that, in 2016, attempted check fraud cost $8.5 billion. This figure rose to $15.1 billion in 2018. Of that, successful check fraud totaled $1.3 billion. A check doesn\u2019t contain the same sophisticated encryption that we experience with online banking and payments. Therefore, it is much easier to commit fraud.<\/p>\n

So, between late payment fees, fraud, and checks bouncing, it\u2019s a small miracle that checks are still so popular. Perhaps it is our fear of change that prevents us from taking advantage of the new digital age.<\/p>\n

Why Is Online Rent Collection Better Than Checks?<\/h2>\n

Let\u2019s take a look at seven ways collecting rent through online payment systems makes the lives of tenants and landlords easier.<\/p>\n

1. Online rent collection is simple<\/h3>\n

Be honest\u2014do you have time to wait for rent checks in the post and take them to the bank to deposit? Oh, and you can\u2019t forget to record them in your accounts manually. Probably not.<\/p>\n

Even tenants are starting to prefer the hassle-free method of paying online. It’s not just young renters, either. Studies show<\/a> that in 2017, 42% of the older generation were already paying their bills online.<\/p>\n

Tenants are more open to the idea of scheduled payments when setting up online rent collection, too. These are great, as automatic payments eliminate the need to remember paying rent.<\/p>\n

2. Chances of on-time payments increase<\/h3>\n

Many online rent collection tools have options to send out reminders to tenants. A quick SMS message or email is often more than enough to jog the tenant\u2019s memories. In fact, your tenants will thank you for it, as they won\u2019t incur late payment fees.<\/p>\n

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3. Multiple payment methods are available<\/h3>\n

Once you start using online payment tools, you no longer have to hand your financial details out as you would for a check. Your payments are completely secure via the ACH network, websites, mobile apps, and pay-by-phone services.<\/p>\n

Related:<\/em><\/strong> Rent Payment Plans Can Benefit Both Tenant & Landlord: Here\u2019s Why<\/a><\/em><\/p>\n

Tenants can choose the most convenient for them. These payment methods can include:<\/p>\n