How to Collect Rent Online
4 best practices for property managers that want to learn how to collect rent online and improve the rent collection process
Why is it important to know how to collect rent online?
If you are a property manager, making the rent collection process as safe and convenient as possible for residents has become increasingly important. While the pandemic made digital rent payments more of a necessity, the benefits of streamlining and automating this process has ensured that online rent payments have both immediate benefits and long-term staying power.
To stay ahead of the curve, you not only need to provide an online rent payment service to your residents but you need to employ best practices to ensure you capture the max amount of rent payments digitally. For example, you need to offer multiple payment method options, including a cash payment alternative. The safest and most efficient way to collect rent is through digital payment methods. The less cash, paper checks, and money orders you receive the better.
As a digital payment provider for the property management and HOA industries, we are obsessed with best practices for collecting rent. These are our top 4 best practices for how to collect rent online.
Want a more efficient rent collection process?
Download The Property Manager’s Guide to Common Rent Payment Mistakes to identify ways to improve your rent collection process & get paid faster.
1. Choose an online rent collection software that your residents want to use
The first step to collecting rent online is to choose an online rent payment platform that will allow your residents to make payments online. Because the next generation of renters were born into a digital world, it’s crucial to choose a rent payment software that features a modern and highly intuitive user experience. Here are some features to consider when choosing the right rent software for your business:
A mobile rent payment app for on-the-go flexibility
To provide the best experience for your residents, choose a mobile-first community app with a simple workflow that will allow your residents and staff to complete their tasks quickly and efficiently. Rent payment apps give communities a boost in digital payment adoption. You might be surprised to learn that the average multifamily property only receives 30% of its rent payments digitally. Lincoln properties, one of the top 50 multifamily companies in the US, enjoys a 72% digital payment rate thanks in large part to their mobile app.
When looking for an app make sure its:
But your app should not just be a payment app. The better, more comprehensive apps include other features such as utilities, resident communications, package management, amenity reservations and integrated work orders. The more features you can pack into a single app the better your adoption rates are going to be. And the happier your residents are going to be when they can manage their entire living experience from a single community app.
Multiple digital rent payment options
Your payments provider should offer all major payment options including ACH, debit, and credit cards. Residents appreciate this online rental payment flexibility. While they are out-and-about running errands, they should have the ability to pay via your community’s rent payment app, or at the very least, with a representative over the phone.
You can also offer flexible rent payments, a feature that allows residents to split their rent into smaller, stress-free payments throughout the month. Zego partners with Flex to pay your properties in-full and on-time on the resident’s behalf. Flex then allows the resident to create a custom payment schedule at an affordable monthly membership price.
The best payment providers will also allow you to convert cash into digital transactions. Our Zego CashPay solution, for example, lets residents pay with cash or debit card at over 25,000 retail locations nationwide. The CashPay transactions appear in the Zego system instantaneously and integrate into your accounting software.
Some renters are reluctant to give up the checkbooks. It’s important to be able to accept checks without having to process them in the office. That’s where Lockbox solutions can help. Lockbox allows residents to still pay their rent with a check but instead of sending them to your front office, they mail them to a PO box. From there, the checks are scanned daily by a 3rd party processing center and integrated with your accounting software. Checks are visible in your software with all of your other receivables. It’s a win-win for your residents and your staff. But be careful when choosing a Lockbox provider. Not all providers were built specifically for property management so the payments may not integrate seamlessly with your software the way Zego Pay Lockbox does.
Rental Credit Reporting
A lot of people are surprised to learn that rent payments are not automatically reported to the credit bureaus. And it’s a shame because for most renters it’s the largest monthly payment they make. Reporting those monthly payments can help people establish a credit history which is critical for making large purchases like a car or house.
Find a provider that offers rental credit reporting so you can help your residents build their credit histories. This can differentiate your properties from others and provide a powerful incentive and draw for your residents.
And it’s easy. In order to report rent payments to credit bureaus, residents simply opt-in to the program within their online payment portal or app. From then on, each time the resident makes a rent payment through your system, your payment provider will automatically report that payment to the credit bureaus along with any other digital rent-related payments.
An added bonus is back reporting. Back reporting allows renters to report any payments made through your system during the previous 24 months. It’s a quick and easy way for renters to impact their credit report. It usually comes at a flat fee of $50 but it’s worth it to renters. LevelCredit, a leading rent reporting provider in the residential real estate space, found that over 40% of the residents who signed up for their rent reporting program also purchased the “look back” or “back-reporting” service.
Dedicated Online Payment Support for Your Staff and Residents
Your new provider should offer dedicated support to ensure you are getting the full value from the platform. Do they have a support center to accept payments over the phone 24/7/365? Even when your office is closed, your payment provider should still be able to accept money from your residents when it’s convenient for them.
Monthly Digital Rent Reminders
Automated rent reminders can help reduce late payments and increase cash flow. Best-in-class payment providers will link your accounting software to their rent reminder program. This integration allows the system to automatically send an email, text, or push notification (depending on preference) to residents whose ledgers show a balance due.
At Zego, we provide a feature called Rent Cycle Automation. This program helps you collect resident contact information and automate activation and rent reminder campaigns. One of the focal points is segmentation based on prior resident activity (smart reminders). Below are a few examples.
2. Choose the right pricing model for online rent payments
When deciding how to collect rent online, it’s important to understand the fees structure for your residents. Digital rent payment adoption relies heavily on the pricing model you have set up with your provider. Because digital rent payment processing fees can add up to be a big expense, it’s important to choose the pricing model that will mutually benefit you and your residents. Here are the 3 different types of digital rent payment pricing models:
- Standard passed
In the standard payment processing model, payment processing fees are paid for by the resident. Although this removes the burden of having to pay transaction fees, management companies that use this model have considerably lower digital rent payment adoption.
- Standard incurred
In this model, the property manager pays the processing fees associated with digital payments. In this model the fees that the management company pays are typically substantially lower than the fees assessed in a standard passed model. The benefit of this plan is that the usage of digital rent payments typically doubles.
- Subscription ACH
Management companies under this model pay a small, monthly per-unit fee that includes all ACH transaction costs no matter how many residents pay digitally. This works best if over 50% of your resident payments are digital.
3. Educate and train your on-site staff on how to collect rent online
Educate managers and on-site associates not only on how to collect rent online but more importantly, on the value of it. These are your folks on the front lines, interacting with your residents on a daily basis. If they believe in the value of collecting rent online, they’ll be your number one advocate for driving online payment adoption amongst your residents. Here’s how to turn your associates into online payment champions:
Provide training for on-site staff on the “why” & “how”
Over-articulate the value of digital payments during your new hire training in addition to the functionality of the program itself. When your team understands how digital payments can improve or alleviate time-sucking, monotonous tasks and increase productivity, they’ll naturally work harder to ditch paper payments. The top 5 benefits online payments for property managers are:
- Saves time (and headaches)
- Increase security
- Improves cash flow
- Reduces operating expenses and increases portfolio value
- Enhances the resident experience
Roll out property level KPIs to drive adoption
Stay on target with the help of portfolio-wide Key Performance Indicators (KPIs). Your KPIs should be measurable values that demonstrate the effectiveness of your team’s efforts. Once you’ve established KPIs, align your entire staff on the gravity of these targets. Communicate what’s at stake – the trajectory of your business as well as your associates’ professional growth. Track your progress with the help of your online rent payment provider, and review your KPI’s on a weekly or monthly basis.
4. On-board your residents to your online rent payment system
Like the shortcuts on a keyboard, time-saving tools are often underutilized if their existence and value aren’t properly communicated. You’ve got to address your residents’ pain points. Tell a story about how these features available to them through your platform will ease their pain. Remember to also set clear expectations around when a payment is considered late, what payment methods you accept, etc.
Marketing at move-in: Welcome materials & emails
Here are the 3 channels to focus your marketing efforts on to encourage digital payments at move-in.
- The lease
Let your residents know early on about their payment options. Add a payments clause to your lease or rental agreement, and go over the details with each new resident. List all of the acceptable forms of payment, but accentuate the fact that digital payments are preferred.
- Fliers, letters, and other print materials
Although paperless is the ultimate goal, the effectiveness of print marketing, in some cases, cannot be denied. Consider including information about your payment portal in print materials such as your new resident move-in packet, welcome letter, signage directing residents to make a digital payment instead, etc.
- Digital communications
Your resident marketing program should include communications via emails, texts/sms (for those who opt-in), and in-app push notifications. Onboard new residents with instructions on how to use your payment portal. Use digital communications to deliver a stream of practical information while being careful not to overwhelm or “spam” them.
Finding the right online rent payments provider can make a difference in helping your business achieve 100% digital rent payment adoption. Knowing how to collect rent online is a start but choosing the actual product or service itself is a key decision point as well. Zego Pay offers a sleek and modern mobile-first platform for quicker and more efficient online rent collection. Contact us to schedule a no-obligation demo, we love talking about online payments and how they can improve your business!