Why landlords should set up direct debit with their tenants

As the percentage of landlords in Australia increases, so does the demand for quality agencies to manage your investment. Estate agencies often manage hundreds of investment properties and can sometimes let ''rent collection'' fall down the priority of daily actions. One in three landlords surveyed by Console have experienced rent arrears (sometimes, frequently or always). Do you pay your property manager to chase rent when your tenant is in arrears, or would you rather they proactively collect rent when it’s due? Take matters into your own hands and don’t let late tenancy rental payments affect your cash flow.

Is it time to talk to your agency about implementing direct debit with your tenants? We have compiled a list of direct debit benefits to help you make an informed decision:

1. Help tenants pay on time

In a time poor society it’s easy to forget when rent is due; it’s an easy mistake to make but one that impacts your tenant and ultimately you, the landlord. Multiple methods of bill payment can make it hard to keep track of when and how to manage your payments. Make it easy by allowing them to set and forget their payment method. Tenants also receive a reminder when their payment is due to ensure they have the money available in their account.

2. Consistent income on agreed timelines

Inconsistent rental payments make it difficult for you, as the landlord, to manage your own budgets. Direct debit will empower you to sleep easy knowing that your income will be deposited into your account at the same time, every week, fortnight or month. If you get more surety around rent collection (your cash flow), you don't risk your mortgage payments defaulting when they are due.

3. Reassurance that your property manager is in control

Agencies need to manage multiple properties at any one time so, at times it could be easy to overlook a payment that has fallen into arrears. Direct debit is much easier to reconcile, therefore your property manager will have more time to focus on other important tasks. They can also easily manage rent increases, making sure that the tenants pay the updated amount from the first time it comes into effect.

4. Obtain your rental income more frequently

With a defined schedule of rent payments you can request regular payments into your account helping you offset more and more bank costs and retain more money in your back pocket. Ask your property manager about more frequent disbursements.

As a landlord the value of direct debit is in minimising the risk of late rent. Whereas for tenants the value is in ‘doing the right thing’ (being on time and paying the correct rent). Over 60% of landlords recently surveyed recognise that they get the most value from rent when paid by direct debit. 

This article originally appeared on Console and has been republished with permission.