Accounting for property management is complicated enough without further hassles thrown in. And that’s exactly what late rent payments are – a spanner in the works. They interfere with your cashflow and this can have other consequences. You might need to delay repairs or find alternatives to make vendor payments. You could even overdraft your bank account. Late rent can snowball into bigger problems, so let’s look at a few good practices that can help reduce late payments.
- Setup a Reminder System
A payment reminder system can be a helpful hint for tenants to make payments on time. Three days before payment is due is generally a good time to send the reminder. It can be as simple as sending an email blast to tenants. There are also more sophisticated software options to choose from.
- Alter the Payment Due Date
When you rely on rent payments for paying certain bills, you can adjust the rent due date so that rent comes in before these bills are due. A week ahead of your bill due dates will usually suffice. This way even if rent comes in late, you still have some breathing room. You must make sure to notify tenants of this adjustment in due date well in advance so they can make preparations for the change.
- Allow Electronic Payments
Giving your customers the option to pay online is not only convenient for them, it enables you to receive payments faster. This is much quicker than waiting for a check. While most people are too busy to go through the hassle of mailing a check, some tenants might still prefer to continue the same mode of payment. In any case, allowing electronic payments will make it much easier to collect rent on time.
- Screen Tenants
There are sure to be one or two instances of late rent, but if you find this happening often with multiple tenants, it’s time to screen your tenants more carefully. Confirming their proof of employment, calling landlord references and stating guidelines for minimum income required for paying the lease can help in this regard.
- Talk to Late Payers
If certain tenants are consistently late with rent payments, have a conversation with them. Perhaps there are extenuating circumstances that delay their rent payments and you can work out a different timeline for payments with them.
- Collect Late Fees
Usually leases and HOA agreements specify the late fees for overdue payments, but these fees are not always collected. Implementing this policy and collecting late fees will be a stiff reminder for tenants to make timely payments. Do allow for the grace period stated in the agreement, and enforce the policy fairly and consistently. Ensure that you document all communications regarding late fees.
These tips should help reduce late rent payments, which will improve your cashflow and financial health. If you are facing any other difficulties with accounting, please contact us for assistance anytime.
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