A data-driven analysis of 13,000 property managers and 135,529 tenants by Rentec Direct, property management software company, found that scheduled automatic monthly payments is the most effective way to prevent late fees and save renters money.
Of the 10,450 renters who have ACH currently enabled, 3,480 renters with ACH enabled and scheduled monthly rent payments were charged a late fee in 2017 (33%), while 4,932 renters with ACH enabled but did not have scheduled monthly rent payments were charged a late fee (47%). Meanwhile, of the 125,080 renters analyzed without ACH rent payment options, 77,299 were charged a late rent fee in 2017 (57%).
“The outcomes of the study showed significant differences in timely rent payments based on the implementation of automatic payment technology,” the report states. This is largely due to the fact that ACH online payment systems eliminate the need to manually initiate a payment each month. However, only 7 percent of the property managers in Rentec Direct’s study offered tenants an automatic rent payment option.
“Our data shows that those who are actively using ACH to pay their monthly rent had a 24 percent lower rate of paying late fees than those not using ACH at all,” according to the report. “Without any ACH set up at all, the rate of late fees skyrockets to nearly 60 percent.”