When was the last time you paid for something with a cheque? A month ago? A year ago? Even longer? Most of us don’t carry cash on us anymore let alone write cheques, so why is it that some multifamily buildings still favour this type of payment?
Some landlords and tenants may feel that this is the way things have always been done; change would be too hard. Others are wary about technology and online payments. But if you use online banking, you can definitely use an online system to pay or collect rent. Here’s why it just makes sense for apartments and multifamily developments to use an online payment software system.
Processing cheques is not efficient
Cheques are old school. They have their place, but most of us would prefer to pay with a card. The reason for that is debit and credit cards are convenient. Processing the payment is fast and simple. Conversely, it takes a lot of work to process a cheque. In most cases:
- Renters have to order cheques
- Renters have to get the cheque to the landlord
- The landlord must ensure cheques are stored safely before they are deposited
- They must prepare deposit slips
- They need to travel to the bank to make deposits
- They may need to distribute receipts to renters
- They need to make sure cheques are clear
- They must update bookkeeping records
And consider this: if you collect rent cheques from a building with 100 units, you’re processing at least 1,200 cheques each year!
Having an online payment system could give you back many valuable hours which you could use to take care of other responsibilities. Your tenants and the payment processing program will do some of the work, and so many of the steps you are currently taking are eliminated.
Efficiency is very important when you manage a multifamily building. This is one smart way to reduce manual work for yourself.
Processing cheques costs money
Time is money, and the time it takes to process a cheque does end up costing you. In fact, according to the National Automated Clearing House Association, it costs roughly $1.22 (USD) to process a paper cheque. Paper cheques may cost a business up to $24,540 annually when employee labor, materials, bank fees and postage are factored into the equation.
Online payment methods are generally cheaper (or free), and processing fees may be charged to the tenant as opposed to you.
Receipts are generated automatically
A landlord must give the tenant a receipt for a rent payment, rent deposit, or other charge if the tenant asks for one. As a best practice, you will give your tenants receipts for payments even if they do not ask for them.
Records are important for both parties as it allows them to see what was paid for, how much the payment was, and when it was made. But doing this manually is tedious and error prone.
Conversely, when you use an online payment software, a payment record is generated automatically. The tenant will get a receipt through their resident portal, app account, email, or some other electronic method, and the landlord will have access to this information as well. It’s also less likely that mistakes will be made when this process is automated.
The entire rent payment and collection process becomes easier
Mistakes happen, but if you make a mistake while documenting rent, that mistake can be costly! Online rent payment software reduces human error because there is far less manual entry. Furthermore, it’s easier to catch mistakes when payment information is displayed on a few pages as opposed to dozens of different records. Switching from cheques to digital payment options can eliminate many issues, including:
- Transposed numbers
- Double documentation or forgetting to document a payment
- Forgetting to update a payment
- Unbalanced spreadsheets
Tenants get more payment options
Online payment options are generally preferred by tenants, too. Depending on the software system, they may be able to select from a variety of payment types, and even set up recurring payments. That means rent is always made on time, and they don’t even have to think about it.
Many online platforms accept one or more of the following:
- Credit cards
- Debit cards
- eChecks
- Electronic transfers
- Bank drafts
- Money orders
When using an online portal tenants get more flexibility and don’t have to worry about digging up cheques from the bottom of a drawer or container.
Tenants can keep better records
Tenants like to be organized too. An online payment portal helps them with financial records. They should be able to see their payment history and review any fees they are being charged. These records are easier to store, and renters don’t have to worry about safeguarding paper documents.
Is it hard to make the switch?
While setting up rent payments online might have been difficult in the past, it’s easier than ever before. There are even systems designed specifically for apartments.
If you really want to take control of management operations, you can consider investing in a comprehensive software platform like Condo Control. You’ll be able to send out announcements and updates directly to tenants, create a document database, and of course take online payments for rent, amenities, and more. We partner with Stripe, Rotessa and Zego. However, you can also look at options like PayRent or Avail for safe and simple solutions. The implementation is rather painless, especially if your tenants want an online payment option.
Landlords who care for a small number of tenants could agree to use Cash App or PayPal, but this is not recommended for mid-sized or large communities.
Keep in mind that some people will still want to pay with cheques
It’s very important to note that while online payment options are generally preferred, not everyone likes this option. Some residents may still prefer to pay you with a cheque. In Ontario, landlords cannot require post‐dated cheques or require residents to make payments using automatic debit. Simply put, you still may need to deposit a handful of cheques, but at least there will be far fewer of them.
Conclusion
Financial technology has come a long way in recent years. Software and apps developed specifically to make life easier for landlords and tenants are more accessible and affordable now than ever before.
Even if some of your renters continue to pay with cheques, getting an online payment system and offering it as a flexible option for tenants is a great idea. Landlords will enjoy saving time and money, establishing more efficient payment processes, and having more accurate records.
For more information about what making the switch to online payments would look like for your community, send us a message!