Chasing down a late payment is a major headache for most homeowners. Some tenants do not have checking accounts, while others refuse to set up automatic payments due to cash-flow problems. When dealing with a late rent payment, some landlords have opted for cash payments. While cash may be quick, it is not always the best payment method to collect.
Here are some pros and cons of cash vs online payments.
Cons of Cash Rent Payments
- Cash payments are extremely easy to lose, which can be problematic if the money does go missing and you do not have anything to deposit. Lost cash is gone where an online payment can be cancelled and resubmitted similar to a check or money order.
- Accepting cash makes you vulnerable to theft. While most staff members are honest, there is always a risk related to having employees handle cash.
- Cash increases the risk of illegal activity in the rental unit. Individuals working as freelancers and other jobs can often have cash-only income. It is important to know they have sustainable income. There have been some examples throughout history of individuals getting arrested for serious crimes, but they were able to hide by paying for everything in cash.
Pros of Cash Rent Payment
- When dealing with a tenant that simply cannot pay on time, cash may be the only way you can obtain payment.
- Cash payments are easy to track, reducing bookkeeping headaches.
- Cash payments have a lower risk of fraud (unlike checks).
The majority of Americans receive direct deposit for their work, making it easy for them to pay their bills online. Several payment platforms allow for automatic payments, reducing the risk of a tenant failing to pay on time. Here are some of the most common online payment options:
- ACH Payments. There are multiple payment platforms available for ACH payment. Setting up a recurring transfer is the best way to ensure you will see money in your bank account on time each month. The only downside to ACH is there is a possibility of the funds not transferring if the individual does not have enough money in their account to pay the rent.
- PayPal and Venmo. A lot of tenants are using online payment programs to pay their bills. PayPal and Venmo are two of the most common methods. The downside is PayPal does charge fees for business use of their account.
Property management software programs often include a payment system for a minimal fee. Using an online payment portal for rent is a great way to track and manage your tenant’s payments. Landlords can set up reoccurring payments, allowing the tenant to use a credit card, debit card, or ACH transfer to pay their rent. Cash payments and online payments have their own pros and cons.
For more information related to online payment for tenant payments, contact East Bay Property Management today.