Landlords who want their tenants to pay rent online should create and adopt a best-practices policy before implementing a new system. Once the process has been ironed out, most research indicates that both tenants and landlords prefer the convenience of being able to pay rent online. Going digital eliminates the hassles involved in manually collecting and logging rent, reduces errors and late payments, and improves efficiency.
Not so long ago, creating a system to allow tenants to pay rent online was still out of reach given the existing technology at the time. Landlords loved the concept of having their tenants pay rent online, because it held the potential to reduce the headaches involved in collecting rent while improving efficiency and increasing the bottom line. However, they knew the option would have to wait until the technology could be seamlessly integrated into their existing administrative infrastructure.
In the last two years, however, the trend toward being able to pay rent online appears to be gaining momentum. Most experts believe a tipping point has been reached, and that within a short period of time, the vast majority of tenants will opt to pay rent online.
For landlords and property managers who have not yet transitioned to this form of rent collection, a number of options exist in terms implementing the new system:
One option is to partner with online rent payment companies. Though many landlords believe they are better off doing everything themselves, increasing numbers recognize the value of outsourcing administrative tasks. They understand that working with a company that specializes in handling the process of allowing tenants to pay rent online makes for good time management.
At the same time, experts caution that choosing an outside company for this task requires good planning and testing before rolling it out. If the new system fails to integrate with existing accounting software, it can lead to months of administrative headaches. As such, landlords and property managers should carefully examine each option before signing on the dotted line.
A second option for landlords interested in having their tenants pay rent online is to work with their current software provider. The creators of property management software are also keenly aware of the mobile, digital transition occurring in the marketplace. While these companies may not be the first to offer online solutions, there are benefits to waiting until their product becomes available. Chief among these benefits is the knowledge that the new system will be tightly integrated with existing software.
Third, most banks will readily work with landlords to create a system that allows them to send and receive electronic checks or credit card payments. While the implementing this system can be logistically awkward at first, it does represent a very cost effective method of allowing tenants to pay rent online.
When choosing between options, landlords should investigate the answers to a few important questions. First, what are the true costs involved in moving to an online system. Evaluate such factors as setup fees, transaction fees, and other monthly costs associated with the transition. If tenants pay these fees, landlords should keep an eye on the cross point between fees and adoption rate.
Second, any system that enables tenants to pay online must integrate with current accounting procedures in the office. Does the option under consideration allow for this? In some instances, the system generates an export file, but that file must be manually imported to the end user’s system, adding a step in the reporting process.
Third, is the system under consideration user-friendly? Many packages offer what at first blush appear to be total solutions. However, once the tenants actually try to pay rent online, they find that the interface is not intuitive. Landlords should remember that anything claiming to save time and effort must deliver on that claim. Otherwise, tenants will stay with the tried and true method of putting a check in the mail.
Assuming landlords or property managers do find a workable system, the next challenge is to create sufficient excitement to encourage tenants to sign up to pay rent online. While this should not create needless expenses, offering monetary incentives in the form of gift cards, or prizes determined by a drawing can get the ball rolling.
Another strategy is to adopt a phase-in period during which all new residents will be required to pay rent online, while current residents have a period of time to opt-in. When dealing with a large complex of stable renters, this transition should have a long runway leading to implementation. It should also include back-up procedures for those who, for whatever reason, have difficulty changing their rent-paying habits.