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7 Ways for Landlords to Collect Rent on Time and Reduce Late Payments

Collecting rent on time is crucial for running a successful real estate business. When tenants pay late, it disrupts the health of your cash flow. Maintaining a strong and consistent cash flow should always be your primary goal, and it’s easy to understand why:

Cash Flow = Income – Expenses

Rent is likely your primary form of income, so it’s imperative that you receive payments on time every month. Late payments are simply an expense that you can’t afford if you want your business to flourish — and you obviously do.

The bad news is that late payments are inevitable. Your tenants are human, and they’re bound to be late on a payment at some point. The good news, however, is that there are a few key measures you can take in order to reduce late payments and increase on-time collection:

  1. Automate Payments
  2. Screen Tenants Thoroughly
  3. State your Collection Policy and Stick to it
  4. Always Inquire about Late Payments
  5. Implement a “No Cash” Policy
  6. Establish Consequences and Make them Known
  7. Provide Incentives when Appropriate

Below, we explain how each of these steps can help ensure the health of your cash flow — and the success of your real estate business.

#1 Automate Payments

One of the easiest ways to ensure that your tenants will pay rent on time is encouraging (or requiring) them to pay through auto pay. Online bill pay and many rent collection platforms enable tenants to set up recurring payments. They can literally set it and forget it. They just go in, select the correct amount, choose the day they want to pay, and input their payment info. This way, tenants don’t have to remember to pay each month and avoid late fees, and you can rest assured knowing your payments will arrive on time. Auto pay truly is a win-win.

#2 Screen Tenants Thoroughly

Sometimes you aren’t doing anything wrong other than choosing the wrong renters. I can’t stress enough how important a regimented screening process is. When you screen a prospective tenant, you should run a background, credit, eviction, and criminal record check. This may seem a little overkill, but it’s important that you filter out tenants who show a pattern of defaulting on payments. Your business cannot afford renters who don’t pay on time, so best to rule them out now.

#3 State your Collection Policy and Stick to it

When writing up a lease, it’s important to lay out very clearly what your collection policy is. Your lease should include the exact amount due every month, where payments should be made, the payment methods you accept, when rent is due, what your grace period is, and the consequences of bounced checks or defaults on payments. Making your policy crystal clear dispels any possibility for ambiguity.

#4 Always Inquire about Late Payments

A tenant who is late on a payment isn’t likely to be around for chatting, but you should find a way to communicate with them and ask some key questions. These questions include:

  • When do you expect to make a payment?
  • What is the source of income you will be using to make your payment?
  • What will be the exact amount of your payment?
  • What will be your method of payment?

If the tenant intends to pay they will have a valid reason for their lateness and a concrete plan for making the payment. If they can’t answer these questions, or you can tell that they’re being evasive, you’re probably good to start the eviction process.

#5 Send out Reminders

You might be surprised how much a simple reminder can do. All you have to do is send out a text or email a few days before rent is due reminding tenants to make their payments. Sometimes a little push is all it takes to get a tenant to pay on time. To make things easier, property management software like Innago allows you to customize when and how frequently reminders are sent. This way, all you have to do is set it up once, and your tenants will be notified about their upcoming payments each month.

#6 Establish Consequences and Make them Known

Unfortunately, the best way to get people to do what’s required is often to back the requirement with the threat of consequences. For this reason, you must establish what your consequences for late payments are and include them in your lease agreements. You should lay out your grace period, late fees, and eviction policy. It’s also effective to tell your tenants that you will report them to credit bureaus, and then actually follow through. No one likes to be the bad guy, but sometimes that’s what it takes in order to run a successful real estate business.

#7 Provide Incentives when Appropriate

On the flip side of the consequences coin are incentives. Rewarding tenants for consistently paying on time is a great way to encourage them to continue that behavior. Your incentives can be small and still make a big impact. Some easy and cheap rewards might include gift cards to local businesses, gas cards, and waved pet or parking fees for a month.


These are just a few of the many ways that landlords can collect rent on time and reduce late payments from tenants. As we’ve said, it’s incredibly important that you collect rent on time in order to maintain a healthy cash flow. You quite literally can’t afford late payments — and neither can your business.