How to Set Up Automatic Rent Collection
Benefits of Automatic Payment
The best solution to save time and to avoid investing a lot of labor to collect rent is to automate the entire process. Automatic rent collection is very simple and most landlords are opting for it, regardless of the number of properties they have or the number of tenants they have to deal with.
Options for Collecting Payments
1. Auto Debit Facility
There are three major options at your discretion. You can either automate the rent collection by using an auto debit facility. You can opt for online payments or you can opt for post dated checks. The first option is by far the best option. Auto debit facilities are provided by most major banks. It is often referred to as ACH debit. In this kind of an arrangement, your tenant’s bank is instructed to deduct a certain amount of money, the rent, on a recurring basis which may be weekly, fortnightly, monthly, quarterly, half yearly or yearly. This facility or arrangement must be mentioned in the rental agreement and the tenant would have to agree to this obviously. ACH debit forms can be obtained from the tenant’s bank and a copy of the filled form with all details in it must be attached to the rental or lease agreement. With such a facility, the tenant’s bank account would automatically get debited and the landlord would have the rent amount credited exactly on the day that has been decided upon in the rental agreement.
2. Online Payment
Online payment is also a viable option. A landlord doesn’t have to chase the tenant or collect paper checks. Tenants can go online and pay the rent. Any major bank would offer an online billing feature. There is however one shortcoming of this method and that is the tenant still has to manually make the entries or initiate the payment. Thus, the payment is at the discretion of the tenant who can always cause delays.
3. Post Dated Checks
The other option is to collect post dated checks. Some landlords hire property management companies who collect rents on their behalf but this process is merely allotting the responsibility to a company while paying them for the services. The company would still need one of the aforementioned solutions to automate the rent collection process.
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