Rent Collection Policy: Guidelines and Procedures
Establish a rent collection policy, and make it convenient for your tenants to pay their rent on time.
Rent Collection—Commercial and Residential Strategies
Rent collection is an essential factor in managing a property. It can also be the most frustrating if not well handled. Property managers and landlords often look for ways to make the rent payment process effortless and seamless for their tenants.
One solution modern landlords have adopted is incorporating advanced rent collection methods such as using software for rent collection or electronic rent collection. Software for rent collection is a recent method that enables your tenants to make rent payments within an all-in-one property management software using ACH and credit cards.
Even with advanced methods, property managers need to devise commercial and residential strategies to streamline rent collection. Let us look at six crucial strategies you can implement.
Be Clear about Rent Due Dates and Late Payments
Communicating with your tenants from the beginning about paying the rent on time and the consequences for late payments helps to discourage bad rent-paying habits. Clear communication will also help eliminate confusion in your tenants’ minds about due dates, rent payment lease terms, and late fees charges.
Having a written document or electronic report with due dates clearly stated and late payments consequences defined will also prevent any legal blows that may arise if the courts become involved. You will be able to show you gave clear instructions about rent collection.
Enforce Late Payment Consequences
Landlords usually want to give their tenants the best treatment to ensure the longevity of their relationship. This need explains why they may be unwilling to enforce the consequences they communicated about late payments. You will have to perform this uncomfortable task to maximize your profits and curb bad rent-paying habits.
A common consequence used by property managers is adding a late fee charge. As a general rule, choose a late fee charge that is mild enough to motivate early payments and not too high to cause a serious financial burden. If your tenant has a good payment history, it may make sense to talk to them about the reason they are late before adding the late fee. They could be going through a difficult financial challenge and need a grace period.
Switch to Online Rent Collection Methods
Checks, cash, and money orders are outdated means of rent collection in this era of technology. More service providers are moving online, and your tenants are probably paying some bills or expenses online. Switching to paying rent online via software for rent collection or electronic rent collection will improve your rent collection success because of the payment features available.
For example, UnitConnect’s property management software allows your tenants to set an automatic rent payment schedule. The software also lets you see when a payment has been scheduled and when you will receive it. In addition, the software keeps electronic records of receipts and payments—making rent collection easier to manage.
Perform a Thorough Background History
Screening every tenant before you let them rent your unit will assist you in getting tenants who are more likely to pay rent on time. Background history assessment involves:
- Checking your tenant’s income to see if your rental rate is manageable for them
- Checking their credit report and score to gauge their payment history
- Calling their prior landlord to check if they had a good rent collection relationship
Performing a thorough background check on each tenant helps ensure your landlord/tenant relationship starts in a positive manner.
Give Incentives for Tenants with an Excellent Payment History
A great way to counter the feeling your tenants may have for being charged late fees is to offer an incentive for tenants who pay their rent on time. An incentive is a positive reinforcement that helps your tenant feel valued for their efforts and improves your tenant-landlord relationship.
Incentives can be setting up a system to report on-time rent payments to the major credit bureaus on your tenants’ behalf. You can also have in-house quarterly, half-yearly, or yearly incentives for your faithful tenants.
Send a Rent Reminder Notification
Scheduling rent reminders for tenants who claim they forgot the due date would help eliminate that excuse. Sending reminders via a text message, phone call, or email is extra responsibility for you and your employees. The best strategy to implement is to use software for rent collection that automatically sends a rent reminder message every month. The software automatically generates late fee charges according to the set date or lease terms.
Enjoy these benefits in an all-in-one property management software that makes rent collection easier. Start your free trial of UnitConnect’s software today and efficiently streamline your rent collection process.