Nothing beats cold hard cash—or so the saying goes. However, when it comes to property management, cold hard cash can present cold hard problems.
Everyone wants to believe we live in a world where people can always be counted upon to do the right thing. And, truth be told, we do. The problem is there’s a whole lot of variance in people’s ideas of the right thing.
Which brings us to four reasons why accepting cash rent payments is a bad idea.
1. Cash invites armed robbery.
Let’s say it becomes common knowledge your office routinely accepts rent payment in cash. Now, let’s say someone in your neighborhood has a need to get their hands on some fast money. They know your office is flush around the first of the month when rents are due, so they decide to make a withdrawal, with a handgun. And, before you scoff “It can’t happen here,” please know it’s not as unlikely as it sounds.
2. Cash tempts employee theft.
One of your employees (God forbid) winds up behind the eight ball for some financial need and can’t bring themselves to come to you for help because they’re embarrassed. They know you usually make the rent deposit on the 15th after all residents have paid, so they figure they have two weeks from the 1st to float themselves an unauthorized loan. Something goes wrong, they don’t get the anticipated influx and your mid-month deposit comes up short.
3. Cash leaves no secondary paper trail.
Let’s say a tenant fraudulently claims they paid the rent. They’re good with computers, so they dummy up one of your rent receipts to cover themselves. Your records say they didn’t pay, but they do have a receipt. Controversy naturally ensues and suddenly you’re faced with taking them to court. But they have a receipt, so it could go either way. Meanwhile, if you’d required payment by check or electronic transfer, or used a rent payment service like Onerent’s, you’d have multiple paths of verification. But no, you took cash. This can also be a red flag that your tenant is scamming you! Trust us, it happens. Read more about tenant rental scam to avoid here.
4. Cash can be lost.
It’s deposit time and you’re headed to the bank. The cash pouch is gone when you get there. You look under the seats, in the trunk, all over the car; the pouch is nowhere to be found. Well, not exactly nowhere. It slipped out of your bundle of items as you were getting into the car and fell to the ground, where a very happy individual who is now enjoying a shopping spree—because you accept rent payments in cash—did find it. And when it’s gone, it’s gone.
Bottom line, accepting cash rent payments involves too much risk. There are many better, faster and safer ways for you to get paid. These include online payments, credit cards, automatic debits and even good old-fashioned checks.
But cash is just a bad idea.
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