How to Manage the Entire Rent Collection Process with Property Management Software

Managing Rental Payments With Rent Collection Software

PSA for rental property owners: timely rent shouldn’t be a pleasant surprise, it should be the norm. And yet, for so many landlords, it isn’t.

If you’re still tracking down tenants for rent this year, it’s time for a change. There are countless tools at your disposal that make it easier than ever to prevent late rent payments and give you the peace of mind you deserve.

Rent collection software has the power to improve every aspect of your rental property business: listings, rental applications, rent reporting, online leases, and—most importantly—rent collection.

Online rent collection is simply a better way to collect rent than old-fashioned mail, checks, cash, and drop-off boxes. It’s easier. It’s quicker. And it’s more reliable. Plus, automatic reminders take care of bugging your tenants so you don’t have to.

Can automatic rent collection really make that much of a difference? Absolutely. In just a few steps, you can enjoy the benefits of online rent collection. We’ll outline those steps below.

Step 1: Add Tenants and Detail Rent Requirements

The first step for online rent collection with property management software is adding your tenants to the system. Most software will ask for basic information like names, contacts, and addresses, but you can typically customize tenant profiles to include anything you need.

Once your tenants are in the system, customize their rent requirements with a few simple clicks (but be sure to closely follow the terms of your lease). Rent collection software will then automatically add late fees and send out automated reminders when you choose. Plus, you can include options for recurring pet fees, parking passes, utility bills, and more. The more intentional you are when setting up online rent collection, the more useful it will be over time.

It’s vital to clearly state terms and conditions in the lease contract. It’s nearly impossible (and unethical) to hold tenants accountable for things not expressly stated in the lease agreement. You’ll want to outline everything in a crystal clear manner: balances due, payment dates, grace periods, late fee policies, and penalties.

Step 2: Choose Payment Methods

Next, you’ll want to figure out what types of payment methods are acceptable for receiving rent. There are multiple free payment options, but each has its pros and cons, so be sure to take the time to weigh your options against one another. Depending on your situation, some avenues may be more helpful than others. Though we recommend going paperless with electronic payments if you can, since it simplifies the process and minimizes human error.

Keep in mind that many places require you to offer tenants multiple payment methods, so be sure to look into state and local laws as you make your decision.

Automated Clearing House (ACH) Payments

An ACH payment is an automated transfer of funds facilitated by the Automated Clearing House, which is a regulated technology representing the partnership between banks and financial institutions across America. Debits and credits are collected in large groups and transferred between bank accounts simultaneously. Also known as eChecks and bank transfers, ACH payments are an efficient, secure, and cost-effective way to send money.

To accept ACH rent payments, your tenant must approve the transaction. They’ll have to provide their name, bank name, account number, and routing number at the very least. Some software (Innago included) will utilize technology like Plaid, which verifies data and securely authenticates bank accounts for payment.

Credit Card Payments

Credit cards (and debit cards) are a popular method of rent payment today, and will likely only continue to get more popular over time.

The traditional way to collect card payments directly from your tenants is to set up merchant services, which can be done through your bank. This method grants you access to a merchant account shared by you and the bank that sponsors the credit card, enabling you to accept credit card payments securely. The payments occur through your account, and then the merchant services provider processes the payment and transfers the money to your business’s banking account.

However, some landlords prefer not accepting credit cards as a form of payment because of the potential for chargebacks and fees. If the tenant goes over their credit limit or the charge is rejected for whatever reason, you’ll have to sort it out with their card company. Some processing fees may also apply, but these can typically be passed on to the tenant.

Money Orders

Money orders are simple for tenants to obtain and provide the benefits of a check without a checking account. They’re often considered more secure than checks, since they require signatures from both parties. However, this method runs the risk of getting lost in the mail (or anywhere, really), so proceed with caution. Electronic payments are probably a better option for landlords in most cases, but there may be rare instances where money orders work fine.

Personal Checks

We don’t recommend personal checks because (again) they can get lost in the mail, and you run the risk of banks not honoring checks. Minor mistakes can void checks entirely—and simple things like spelling errors and forgotten decimals can add days to the payment process. Personal checks can often absorb precious time and effort as you try to track down money owed to you. Our recommendation is to embrace one of the other methods listed here, if possible.

Cash

We recommend you avoid cash payments unless you absolutely cannot—and even then, you may want to think twice. In most scenarios, you can use another option.

Cash is the least reliable way to receive rent because it is easily misplaced, lost, and it isn’t automatically tracked the way credit card transactions are. Physical cash payments also come with the risk of counterfeits, which are a mess you want to avoid at all costs.

Property management software helps simplify the payment process exponentially. Do your best to get tenants to adopt electronic payments to minimize stress and save you both time. It’s easier, more secure, and ideal for tracking purposes.

Step 3: Collect Payments

With your tenants and methods of payment all set up, you’re ready to let software do the work for you. Encourage your renters to set up automated payments, since autopay ensures they pay on time every time.

It’s also wise to make sure that your software has partial payment blocking—in some states, nonpayment evictions become very complicated (and even null) if you’ve accepted a few dollars of rent.

According to Pew Research Center 98% of American adults own a cellphone, and 91% of those are smartphones. They’re more prevalent than ever. It’s incredibly helpful for your property management software to have a quality mobile app so tenants can pay on the go if they need.

As a landlord, using your mobile phone for rent collection can be a great option. You can track notifications and rent from anywhere. Mobile apps make the rent collection process easier than ever before for everyone involved.

Innago: Make Online Rent Collection Effortless

If you’re ready to simplify your property management business, then Innago has you covered. It’s one of the few free options in the property management software world that’s actually got everything landlords of all type and sizes need.

Innago’s tenant screening services make it easy to run rental, criminal, income, and credit checks on your applicants, so you can find the right renters every time. When it comes time to collect rent, Innago can help with automated communication, automated accounting, and even automatic bank deposits on the landlord side of things. Tenants can set up autopay to avoid late fees, and landlords can track access financial reports any time.

Conclusion

Gone are the days of mailing checks, missing cash, in-person drop-offs, and awkward conversations. We live in an age where online rent payments are becoming the norm. Refusing to simplify things and go paperless can cost you both time and money in the long-run—plus, it makes growing your business even harder.

Rent collection software simplifies it all, from applications to lease agreements to financial reporting. Ditch the filing cabinet and embrace the ease of property management software.

FAQs

What is the best free software to collect rent payments?

Innago is the one of the best free software for collecting rent payments currently on the market. Few other platforms offer 100% free access to their software, but other platforms like Avail, TenantCloud, and TurboTenant do offer free plans or options.

How to keep track of rent payments as a landlord?

It's recommended that landlords use rent collection or property management software to keep track of rent payments instead of keeping physical ledgers and chasing tenants down. This helps ensure transaction data is categorized and stored properly for tax season, reporting, or during a dispute.

What is the best rental software?

We’re biased, but Innago is arguably one of the best rental software available for landlords due to its ease-of-use, robust tools, and unbeatable price point. You won’t find any other software tool with as many user-friendly and useful features available at our price point (free!).

What background check do most landlords use?

Most landlords will run credit and criminal checks, with some opting to run eviction and income checks as well. Innago users can run all of these checks through Innago’s tenant screening and background check feature. Learn more about our free, comprehensive reports here.