Rent payments are an essential element of the landlord-tenant relationship, and landlords must be aware of the risks associated with accepting cash rent payments. As more and more people move away from using cash, landlords are increasingly favoring online payment systems to collect rent. But some landlords still prefer to get their rent in cash, so they need to know what to expect if they do. This article will discuss the disadvantages when you accept rent in cash.
Should I Accept Rent In Cash? – Here Are The Risks
If you’re a landlord with a few units, you might feel comfortable storing rent cash anywhere in your home. However, keeping money around your home or office isn’t practical if you’re a property manager with an extensive portfolio. Not only is it risky, but it also makes it harder to track how much money you have and how it’s being used.
Cash is a tangible asset, which makes it easy to lose or mishandle. It’s also vulnerable to theft; once it’s gone, there’s no way to recover it. It is why it’s important to find a secure way to store rent cash, whether in a locker, a cabinet, or somewhere else. Property managers also need to be mindful of potential risks such as employee robbery or theft.
To ensure that rent cash is safe and secure, property managers should find a way to store it until it can be deposited in a bank account. A locker or a cabinet might be a good option, but it’s essential to consider the potential risks and ensure that the storage solution is secure. Additionally, property managers should be vigilant about who has access to the cash and keep a close eye on it at all times.
Depositing rent money into a bank account is a routine process that must be done every month. Property managers need to figure out the best time and method for making these deposits safely and securely.
For landlords, keeping track of cash payments can be a real hassle. You must physically record the receipt for each cash payment of rent that you accept. Because cash payments don’t leave a paper or electronic trail, you must give your tenants proof of payment.
In some places, landlords are required by law to provide the tenant with a receipt as soon as they receive cash rent payment. This requirement can be annoying because it requires you to present each receipt individually rather than all the receipts for the month at once.
It can be time-consuming and error-prone to manually enter the information for each cash payment into your accounting program. On the other hand, your accounting software can automatically upload data from the transactions if you accept rent payments via debit cards, credit cards, or eChecks. As a result, keeping records is much more effective and error-free.
When it comes to responsibility, cash payments can cause issues for landlords. It can be challenging to determine who is responsible if rent falls short, causing problems with collection.
Many landlords believe that a drop box is easy to collect cash rent. However, there is a chance that tenants will underpay their rent before dropping off the envelope. If you receive rent that is $50 short, it can be challenging to hold the tenant accountable because they may deny shorting you.
To avoid such problems, have someone physically count the money in front of the tenant before accepting payment. You may require additional assistance with larger units. However, this solution may cause trust issues if rent money goes missing.
Interruptions to Your Schedule
Collecting cash payments as a landlord with a few rental units can be time-consuming because you’ll need to visit each property to collect the rent. However, if you’re a property manager with an extensive portfolio, you’ll need to designate someone in your office to handle rent collection and counting.
Dealing with cash payments can also necessitate frequent trips to the bank to deposit the funds, making the process time-consuming and labor-intensive. However, if you use a more technologically advanced method, such as check payments, you can quickly deposit the money from your home.
Why Rent Payments are Going Cashless
The days of writing checks, waiting for them to clear, or going to the bank to deposit cash is long gone. The advancement of technology has provided tenants with a plethora of convenient and secure payment options, making electronic rent payment methods increasingly popular. Rent payments can now be made quickly and easily via various payment platforms, including direct deposit, online payment portals, and mobile payment apps.
One of the major factors driving the shift to electronic rent payment methods is convenience. Tenants no longer have to deal with the inconvenience of writing checks or the risk of losing money on the way to the bank. They can easily make rent payments from the comfort of their own homes with just a few clicks. This saves time and effort and eliminates the need for physical transactions, which is especially important during times of social isolation or pandemic.
Increased security is another significant benefit of electronic rent payment methods. All transactions are recorded with online payment portals and mobile payment apps, providing a clear record of all rent payments. As all transactions are documented, this eliminates the possibility of rent payment disputes. Furthermore, using secure payment gateways like PayPal or Stripe adds an extra layer of security to online transactions.
Electronic rent payments give landlords an easy and efficient way to track their income and expenses. They no longer worry about manually tracking rent payments because all transactions are recorded automatically. This makes it easier for landlords to monitor their finances and ensure the accuracy of their records.
Furthermore, electronic rent payment methods give landlords real-time access to their financial records, allowing them to manage their cash flow better and make informed investment decisions. This level of transparency and record-keeping convenience is especially beneficial for landlords who own multiple properties or manage numerous tenants.
Start Accepting Cashless Payments
To avoid these risks and problems, going to a cashless system is your best solution. There are a few good services available today that you can use like PayRent, Avail, and Host Merchant Services.
Host Merchant Services is a leading provider of small and medium-sized business payment processing solutions. The company provides a variety of payment processing services designed to make it easier for businesses to accept credit and debit card payments. Landlords can use Host Merchant Services to provide their tenants with a convenient and secure way to pay rent, simplifying the rental process and improving the tenant experience.
Secure Payment Processing:
Host Merchant Services employs cutting-edge technology, such as encryption and fraud detection systems, to ensure the safety and security of all transactions. Landlords can rest easy knowing that their tenants’ financial information is secure.
Fast Approval and Setup
It provides quick and easy approval, allowing landlords to get up and running quickly. The setup process is also simple, allowing landlords to begin accepting credit and debit card payments immediately.
In addition to its many features, HMS has a user-friendly interface that makes managing landlords’ payment processing needs simple. The interface is simple and easy to use, allowing landlords to view transaction history, reconcile payments, and do other things.
Host Merchant Services provides competitive pricing for payment processing services, allowing landlords to save money while still providing tenants with the convenience of credit and debit card payments.
Easy Integration with Existing Systems
Host Merchant Services integrates seamlessly with landlords’ existing systems, making the transition to accepting credit and debit card payments a breeze. This enables landlords to begin receiving payments quickly and with minimal effort.
24/7 Customer Support
The company also offers 24/7 customer support, allowing landlords to get assistance whenever they need it.
While accepting cash rent payments may appear appealing to some landlords, it comes with many risks and challenges. These risks include issues with safety, accounting, determining responsibility, and disruptions to the landlord’s schedule.
The shift to electronic rent payment methods provides landlords with a convenient, secure, and efficient way to receive and manage rent payments. Tenants now have numerous options for making rent payments, from direct deposit to online payment portals and mobile payment apps, thanks to technological advancements.
Before deciding, landlords should consider the risks of accepting cash payments and weigh them against the benefits of electronic rent payment methods.