“Tips for Faster Rent Collection on Your Commercial Office Space” written by Mike Marko
Are you having problems collecting rent on your property?
If you are, then fret not.
Most property managers also experience the same problem on a regular basis. In fact, it’s considered as one of the major issues for rental properties, particularly a commercial office space.
On the tenant and landlord’s side, a delay in rent payment and collection means a delay in or cause of insufficient cash flow. Thus, strict policies must be imposed to secure the stability of both’s businesses.
To prevent any problems regarding rent, here are some tips for faster rent collection on your commercial office space.
Collecting Rent for Commercial Office Space
To prevent future disputes and problems, the tenant and property manager should negotiate the rent collection clause before coming to an agreement. The rent collection clause is one of the most important sections of a lease agreement, and must include details about the rent such as:
- When the tenants should pay the monthly rent,
- The amount of rent,
- The given grace period,
- The way they can make payments, and
- Any corresponding additional fees for late payments of rent.
The rent clause is a sensitive section of the lease agreement, as it deals with monetary matters. If not prepared properly, it may lead to legal issues that will negatively impact both you and your tenant’s business.
Here are some tips to help you prepare the perfect rent clause for your commercial office space.
Tip 1. Use an Autopay or Auto-Deduct System
One of the most convenient ways to collect rental fees is to regulate the autopay or auto-deduct system. Applying this system eliminates the hassle of collecting your tenants’ payments personally.
Various systems are available for the automatic sending of the rent payment straight to your bank account. Using this in your commercial office space will minimize late and unpaid rents. It will also ensure a steady flow of income.
Tip 2. Regulate a “No Cash” Policy
Here are a few reasons as to why rent payments in the form of cash are not advisable:
- Cash can be easily lost.
- It leaves no record, which could be needed in case the tenant disappears.
- Using cash be considered, at times, that your tenants are involved or doing illegal business activities.
- Cash requires a receipt and tracking through banking and financial statements.
Thus, it is advisable to regulate a “no cash” policy and let your tenants know about your preferred payment methods. This will prevent any of the possible problems stated. Consider accepting checks, direct deposits, or automated payments because these are easier to track over.
Make sure to negotiate the methods of payment before the start of the tenancy. Ensure fair and thorough discussions before asking them to sign their lease agreement.
Tip 3. Adjust to Your Tenant’s Needs
There may be certain situations wherein the cause of the tenant’s late payment is due to a hectic schedule. If this is the case, consider renegotiating a new payment schedule. Pick a date that works best with their schedules — a date when both of you would expect the least work traffic.
In other cases, their monthly cash flow might be insufficient to hand down a single payment. If so, consider having a discussion about weekly or biweekly payments. Remember that successful partnerships start with harmony and understanding, and communication is key.
If these adjustments still do not work for them, you have to ask necessary questions regarding the causes of delay.
Tip 4. Ask Necessary Questions about Late Payments
Asking questions enable you to come up with different strategies on how you would deal with the tenant. On the other hand, the tenant can improve and innovate ways on how to fulfill their responsibilities to you.
Here are some questions to ask them regarding their late payments:
- “When will you be able to settle the payment?”
- “Where will you make your payment?”
- “How much will you be paying?”
- “What do you prefer as your mode of payment?”
- “Where will your payment come from? From what source of income?”.
If your tenants are evasive in answering these questions, there is a possibility that they may be hiding something. It could be that their business is not running smoothly, or they are having other internal issues.
You then have an option to send an eviction notice. However, make sure to state the right reason for sending the notice. Check your state rules regarding the legal and allowable time frame to send an eviction notice before you proceed with filing for eviction.
Tip 5. Inform Tenants of the Consequences
It is important to let tenants know that they will face certain consequences when they violate the terms of the lease agreement.
You can always report the tenants who are consistently missing payments or those who fail to pay within the agreed time. Doing this will result in negative items on their credit score that could affect their future financial endeavors.
Your lease agreement must state the consequences of failing to pay their rent on time. But you must remember to use the reporting not as a threat, but a reminder for them to submit payments in a timely manner.
For your guidance on how to report late payments, you may call the following agencies:
- Equifax, 1-800-685-1111,
- Experian, 1-888-397-3742, and
- The TransUnion, 1-800-916-8800.
Tip 6. Give Incentives to Good Paying Tenants
If your tenant pays rent on time and is excellent at communicating and resolving any issues, offer an incentive for them to continue their great performance and initiative.
Send a simple gift during the holidays or at the renewal of the lease to those who pay on time. It’s a great way to show your appreciation to good tenants. Doing this could motivate your tenant to stay longer in your commercial office space.
Final Thoughts on Tips for Faster Rent Collection on Commercial Office Space
Today, we discussed some tips on how you can assure fast and timely rent payments for your commercial office space. We covered how timely rent collection begins with your lease. The rent collection clause must include details about rent such as the total amount to be paid, payment schedules, forms, grace periods, and penalties for delays.
Using an autopay or auto-Deduct System prevents the hassle of getting rent in person. This system will collect and send the rent straight to your bank account.
Regulating the “no cash” policy is another useful tip for collecting rent because it allows both the landlord and the tenant to keep track of when payments are made, and how much they are receiving/paying.
You may also adjust your requirements to fit the tenant’s schedules and budget. However, if there are still delayed payments afterwards, this is where negotiation may come in. Discuss possible solutions to resolve the problem, and imply that certain consequences will come should they fail to fulfill their responsibilities.
But if the tenant is highly responsible and shows initiative in making monthly payments, it makes sense to give incentives and show your appreciation.
If you have questions about commercial office space rent collection, leave them in the comments below.
If you need help marketing your business online then check out IM Consultant Services.
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this web site or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.