Collecting rent payments is one of the most important jobs a landlord can do. Monthly payments are likely to be the most important source of income that your rental business has, so it is important to find a method that is reliable and secure.
A cash rent payment might seem like a good option; it’s straightforward, tangible, and doesn’t have the risk of bouncing like a check. However, compared to newer rent collection methods provided by property management software, it involves a good deal of risk. Here are four of those risks that might make you reconsider collecting cash payments.
- Cash Can be Lost or Stolen
While money being reliable and tangible might seem like a positive that cuts out the middleman at first, the issue of getting a lot of it at once means that it can easily be mishandled. This problem becomes worse the more properties that you manage. Keeping track of a lot of money that comes in at the same time every month can be tricky, and you won’t want to leave it lying around.
This adds an extra step of finding a place to store your money. On top of that, there is no middleman cut out, because eventually you will want to take this cash and deposit it into your bank account. With online rent collection, it is much easier to transfer funds from the software directly into your bank account without needing to work in the extra trip.
- Big Investment of Time
Both you and your tenants have to invest a lot more time making a monthly rent transaction with cash as opposed to online. This is especially true if a tenant is late with rent or is missing a payment altogether. Needing to track a tenant down in order to collect cash and make sure that it’s the right amount is a big investment on your end.
Meanwhile, with property management software, tenants can set up automatic withdrawals from their bank account directly onto the platform. Paying rent doesn’t even involve leaving the house, and because payments are automatic, there is less of a chance that rent will be late simply because a tenant forgot.
On top of that, when you receive a cash payment, all your accounting and bookkeeping has to be done manually, which is a huge time commitment that property management software can practically eliminate.
- Susceptible to Accounting Errors
In addition to saving you a lot of time on bookkeeping, automatic records are programmed and precise, eliminating the possibility of human error as you enter records over a long period of time. Issues with accounting can lead to problems and disputes over time, so making the process as exact and error-free as possible is always a plus.
- Less Transparency and Trust from the Tenant
Some states require a landlord to provide a rent payment receipt to a tenant immediately. Even if a receipt is not required, however, it is always best practice to provide one. It will help keep your business up to a professional standard and will let the tenant know that their money went to the right place.
Accounting errors that result from manual input can not only cause disputes, but they can also threaten the professional image of your rental business. The goodwill that you have established with your tenant can be challenged if a receipt contains inaccurate information or is delayed or never delivered. If you have a lot of tenants, producing an individual receipt for everyone makes it more likely that the delivery of receipts is delayed or that you decide not to go to all that trouble.
Property management software not only generates records automatically, but it also produces receipts and invoices and sends them to the tenant as soon as a payment is collected. Because you don’t have to do the work, the question of sending receipts and upholding your professional image is one you shouldn’t have to ask.
Accounting errors that result from manual input can not only cause disputes, but they can also threaten the professional image of your rental business. The goodwill that you have established with your tenant can be challenged if a receipt contains inaccurate information or is delayed or never delivered. If you have a lot of tenants, producing an individual receipt for everyone makes it more likely that the delivery of receipts is delayed or that you decide not to go to all that trouble.
Accounting errors that result from manual input can not only cause disputes, but they can also threaten the professional image of your rental business. The goodwill that you have established with your tenant can be challenged if a receipt contains inaccurate information or is delayed or never delivered. If you have a lot of tenants, producing an individual receipt for everyone makes it more likely that the delivery of receipts is delayed or that you decide not to go to all that trouble.
Conclusion
Ultimately, cash rental payments cause more problems than they’re worth. With the viable alternative of property management software, which makes one of the most significant parts of your job easy and automatic, there is no reason to continue risking so many issues for the sake of traditional methods. Make the switch away from cash rent collection today.
