First-time landlords often wonder if they should accept cash as a form of payment for rent. It can be awfully tempting. There’s no risk of a bounced cheque, you can simply deposit the money straight away. And if your tenant is paying late, or is having financial difficulty paying, it may be the only way to secure your rent.
So, there’s little doubt that it can be appealing to accept cash. However, there are drawbacks.
The Cons of Accepting Cash
Cash can be lost or stolen: When that happens, you are out of luck completely. There’s no cheque to cancel, you simply are out of your rent payment.
Cash can be a sign of illegal activity: Not all times, but there is a heightened chance that if someone only wants to pay you in cash, there could be some illegal activity happening in your rental unit.
Cash opens you up to theft: Keeping cash on the premises is never a good idea. Most people are honest, but you definitely increase the risk of theft when cash is being handled by employees.
Is there a better solution to taking cash? Sure is.
Collect Rent Online
We do almost everything online, from buying books to streaming movies to paying our bills. So why not collect rent online? Consider everything you have to gain:
1. More Security
Skip the aggravation of bad cheques due to fraud or insufficient funds. And, remember we spoke about the perils of having cash on hand? You’ll immediately sidestep the risks of cash being lost or stolen.
2. Lower Costs
The cost of processing one cheque might not seem like much. But what about the costs of processing 10, 20, 30 or more cheques each and every month. From bank fees to NSF charges to admin costs in the form of labour and resources required to process the paper-based cheques, it all adds up. In fact, some studies say that it can cost between $15 to $25 to process a cheque.
In addition, banks are charging for cash deposits over a certain monthly limit between $1000-$10,000 and have extra fees.
3. More Time
When you wave buh-bye to manual tracking processes, trips to the bank to deposit cheques, and sifting through records to determine which tenants are in arrears. When you collect rent online, you’ve instantly added hours to your day. Sometimes, overdue rent is the result of forgetfulness, so use your tenant portal to set up automatic reminders of upcoming or overdue payments. For tenants who repeatedly have late rent payments, you can easily flag and track their activity, so you can take preventative action to ensure your income stays steady.
4. Better Customer Service
Most people today pay at least one monthly bill through online banking. When you collect rent online you provide a convenient payment option that tenants are looking for. And, if you’re not spending time chasing down the rent, you can put more hours developing stronger relationships with current renters and attracting new ones.
5. More Reliable, Higher-Quality Records
With a digital record of every rent payment, renters get easy access to their receipts, and you can immediately see who has or hasn’t paid. For multi-family property management firms, you’ll also be able to see across your portfolio of units, to see which buildings have the highest and lowest rates of collections.
More than just account and payment information, you can track every step of tenant communications from the first late payment notice to the eviction notice as well as court dates making it a vital part of the eviction process for property managers.
So what are you waiting for? Collect rent online. Your renters – and your income statement– will thank you.
If you’d like to reduce vacancies and attract and retain top-quality tenants, all while improving your cash flow and bottom line, we can help. To learn more, get started here.