As a property owner, collecting rent payments is a vital part of your business. Traditional rent collection methods, such as collecting checks or money orders from tenants, can be time-consuming and labor-intensive. Fortunately, there’s a faster and more efficient alternative: Automated Clearing House (ACH) payments.
What is ACH?
ACH stands for “Automated Clearing House,” which is a network of banks and financial institutions that facilitates transactions between banks. Simply put, ACH is how electronic bank-to-bank transfers are processed.
It is simple and effective, eliminating the need for paper checks or cash. The system processes transactions in batches overnight to streamline and automate the payment process.
Businesses, organizations, and people use ACH to do many things, such as paying bills, getting paid, and shopping online. It is safe and reliable, and strong encryption and authentication measures are in place to protect private banking information. Many people believe it and use it for electronic fund transfers, which makes them faster, easier, and less likely to go bad.
How Does ACH Work?
ACH rent payment is an intelligent payment mechanism that enables smooth, safe transactions. In this section, we’ll look at the inner workings of ACH, concentrating on two important characteristics. First, we’ll take a look at ACH payments, explaining their significance and benefits. Then we’ll go into the mechanics of ACH payment processing, revealing the intricate stages that make it all possible. Prepare to discover the enchantment of this breakthrough financial technology.
Benefits of ACH
ACH is the best choice for landlords who want to save time and money while still making sure that rental payments are handled safely and securely. ACH has many benefits, some of which are:
Cost-effectiveness
One of the major benefits of ACH is that it is significantly less expensive than traditional payment methods. The cost of processing an ACH payment on average is up to 7 times less than processing a paper-based check.
Efficiency
ACH payments provide a timely and efficient way of transferring funds between banks. Transactions are processed quickly, usually within one to one-to-two business days. This means that landlords and property managers can get timely rental payments, and tenants can easily pay their rent on time.
Security
It’s not always safe to write checks on paper because they can get lost, stolen, or changed. When renters use ACH payments, which are computer transfers, mistakes, theft, and fraud are less likely to happen. This makes sure that both renters and owners are safe in their dealings.
Convenience
Tenants can pay their rent using ACH from the convenience of their own homes or businesses. Tenants can easily make one-time payments, set up recurring payments, or change current payments by connecting to online platforms like STRATAFOLIO. This makes the payment platform flexible and easy to use.
Compliance
ACH transfers are regulated by an exclusive set of rules and regulations that provide the framework for the ACH system. By complying with these rules and regulations, property owners can manage tenant rent payments and avoid potential legal issues.
Checks vs. ACH
While checks have been a standard form of payment for decades, they come with their own set of issues.
- Checks are known for their slow process overall.
- Mailing a check can take several days, and checks can get lost in the mail.
- Bank closures during holidays or weekends further delay the processing of checks.
- Banks may not process checks after hours, causing additional delays.
- Approval from internal employees may be required before cutting checks or increasing limits.
- The approval process can be time-consuming, and the unavailability of employees can further delay payments.
- For those who use a post office box to receive mail, someone must make a special trip to that post office box to retrieve the mail and process the check, taking additional time for the person responsible for that task.
- There is an increasing risk of fraud with stolen paper checks, including stolen checks, check washing (where a chemical compound is used to erase the payee and the amount), and forgery (where a signature is used to create fake checks). All of which lead to additional delays from tenants and legal fees to resolve the issue.
ACH payments are faster and more efficient than checks. They can be processed in just a few business days and don’t have the same limitations that checks do. By switching to ACH, you can save time and eliminate the hassle that comes with payment by check.
Regular ACH vs. Expedited ACH
STRATAFOLIO now allows expedited ACH for both autopay and one-time payments, which gets you paid faster! Regular ACH vs. Expedited ACH refers to the time it takes for these ACH payments to process.
Processing times for ACH payments vary, but regular processing can take 4-7 days, while expedited processing takes 2-3 days (holidays and weekends may affect this). However, if your bank doesn’t support Expedited ACH, your payments will be processed as Regular ACH.
Standard ACH vs. Premium ACH
Standard ACH vs. Premium ACH refers to the amount of money that users can submit payments for. To use ACH payments with STRATAFOLIO, property owners need to have Premium ACH set up in their STRATAFOLIO account. The information required may vary depending on your account type:
- For Standard and Premium Personal accounts, you must provide your First Name, Last Name, Email Address, and Account Type.
- Sole Proprietorship accounts require the information above, plus additional information like industry classification and business EIN.
- Corporation, LLC, and Partnership accounts required the information mentioned above, plus information about the Account Admin and Controller.
STRATAFOLIO offers both Standard ($50,000 or less) and Premium (up to $100,000) ACH options for your tenants. Your tenants can enable the payment of a convenience fee of 0.05%, with a $1.50 minimum per transaction, within STRATAFOLIO. Tenants can also set up autopay, automatically paying rent on the same day each month.
ACH Payments with STRATAFOLIO
STRATAFOLIO’s ACH integration is simple and efficient for property owners. It’s important to note that participating banks and financial institutions may have their own policies regarding ACH, so it’s important to check with your bank to determine your ability to use this feature. By implementing ACH payments through STRATAFOLIO, you can streamline your rent collection process, saving time, money, and effort. Schedule a 1:1 demo today to learn how you can take advantage of STRATAFOLIO’s ACH integration!
For instructions on enabling ACH integration in STRATAFOLIO, check out the following links:
