5 ways to get your tenants to pay their rent on time
Whether or not your tenants pay their rent on time can affect the customer service you provide your landlords who expect prompt, regular payments. Here are five ways you can help your tenants make timely payments, every time.
In recent research asking landlords to choose the letting agent services that they find most valuable, the top result was rent collection, at 68.12%. Why? Because chasing rent payments can be time consuming. For agents who shoulder the responsibility of collecting rent for their landlords, late payments from their tenants can delay payments to landlords - and delay your agent fees too.
Tenants can be prone to human error, whether it's forgetting to pay the right amount, missing their rent due date, or adding an incorrect payment reference - all making your accounts department's life more difficult.
To provide the best service to your landlords, you want to make sure that you're paying them as close to the due date as possible. Having a strong chasing process is important to achieve this but you are fixing the symptom, not the root cause. The key is to incentivise your tenants to pay rent on time, rather than becoming really good at chasing rent after it is already late.
Choose the right payment methods
Choosing the right payment methods that suit your tenant and your business is key to helping your tenants pay their rent on time. You should consider moving away from payments that take up a lot of your time, like cash. Cards can be useful to get tenants to pay immediately (in person or on the phone) but can cost you a lot in fees.
Remind your tenants to pay
A simple reminder before the rent is due can make a lot of difference. There are many ways that you could set this up to help them to remember that their payments will be due soon, whether in the form of an SMS, email, or just a recurring calendar event.
You can even outsource this type of service to a rent collection provider. Goodlord's Rent Collection service sends automated reminders to tenants on a regular basis, to help agency's cut down on the chasing they need to do while encouraging your tenants to pay on time.
Set up recurring payment methods
The best way to avoid tenants forgetting to pay their rent is to take the hassle of having to remember to pay off their plate, with an automated payment. Standing orders are a good way to collect rent in this way. However, that still relies on the tenant setting it up in the first place, and data collected from Goodlord's research suggests that at least 65% of tenants do not set up standing orders despite it being in their tenancy agreement.
Another option is to use direct debits. These provide a much better experience, as they can be set up within 10 seconds via a link or an app, and they can give your agency complete visibility on who has set one up or even cancelled it.
Incentivise timely payments
Access to free vouchers for tenants who pay rent on time can be effective but it could be at a cost to your agency. You could alternatively suggest that your tenants sign up for a service that reports their rental payments to enhance their credit score - rewarding those tenants that pay on time.
Have a safety net in place
Unfortunately rent sometimes comes in late and you need to make sure you have a safety net in place for that. Rent protection insurance is a great back up for when rent arrears become a problem, but you need to stay on top of arrears from the moment they become overdue to make sure you can kick off the process as soon as possible and keep the rent flowing for your landlords.