Property professionals know that getting the rent on the day that it is due is a critical for cash flow and, ultimately, it drives the bottom line. Ideally, every wonderful tenant would pay their rent on time, every time. Yet, as you already know, that doesn’t always happen. Even the best residents can be forgetful on occasion or have a financial emergency that taps into their rent. However, in the vast majority of cases, it is the same one or two tenants that are habitually late.
Here are some strategies to get ALL of your renters paying on time.
Provide Clear Instructions
Set expectations from Day 1 about when rent is due, and what happens if it isn’t paid on time. As you walk your new tenant through the lease, take the time to point out:
- When rent is due every month
- Any late fees and when they are applied
- Rent payment options
- How to use the tenant portal
Offer Payment Options
If you’re still asking for cheques, you’re asking for trouble. Instead, offer other payment options like pre-authorized debit, pay via direct banking, credit card, debit card and EFT. If you rent to students, or young people, the ability to split rent among tenants in a unit can help ensure you get paid on time, or in the worse case scenario, get partial payment.
With some tenants, it’s a matter of changing forgetful or “I’ll get to it later” behaviours. Automate reminders to all tenants 7 days before it is due. This small step can have a big effect on payments.
Apply Late Fees
If your lease stipulates that the tenant will be charged a late fee after X number of days past rent, then do so. Being consistent and following through on policies helps deter late payments.
Consider an Incentive
If late fees are the stick, incentives are the carrot. Some property managers have had success with the use of a small reduction in rent if the tenants pay before rent is due. Others send a gift certificate or small gift as a token of appreciation if the tenant has paid rent on time for 12 consecutive months.
Have an Arrears Strategy
Using your reporting dashboard, it’s easy to see any arrears across your portfolio. Have a plan in place whereby tenants who are late receive a series of automated escalating reminders and warnings.
Communicate with Tenants
Any time a renter hasn’t paid their rent, it’s important to have a conversation with them. Find out what is going on. A simple chat can help you determine if it was a case of forgetfulness or something more, like a change in their financial situation. (And while you need to be empathetic don’t fall for sob stories, you still need to enforce the rules and require rent to be paid on time.)
Some PMs have had success with changing the date the rent to due to align with when a tenant gets paid at work, or, changing the rent payment from cheques to credit card.
How Property Vista Helps
If you need help with tools to help improve communication and encourage online payment, consider Property Vista’s online rent payment system. It makes it easy for your tenants to simply pay online or setup regular scheduled payments. You also have an at-a-glance dashboard to see all KPIs including arrears. To learn more, get started here.