“You get what you pay for.”

It’s a phrase many of us are familiar with and some even live by. It also often rings true, especially when it comes to the world of property management and real estate. If you want convenience, ease of use, speed, and efficiency, you’ll likely have to pay for it, right?

When it comes to rent collection and the question of whether to accept it by paper check or by eCheck, most assume that the former route is the more affordable option. We presume that the simplicity, security, and convenience that comes with an ACH payment also comes at a cost. But what if that is not always the case?

In this article we will outline what exactly is the cost of accepting paper checks for rental payment and what other options, as a landlord, you have to consider.

Getting to the Bank

The cost of doing business via paper check is sneaky. The fees are indirect, and will never show up on a line-item spreadsheet. But that doesn’t mean they don’t exist. You might champion the absence of a processing fee as your reasoning for sticking to paper checks. But you’re forgetting one important thing. The party doing the processing in this equation will be you.

And just getting to the bank is not cheap. But don’t take our word for it. Let’s breakdown the math. The average distance between any landlord and their nearest bank is about 3 miles. Considering operating costs, gas, depreciation, wear and tear - you’re looking at a base travel expense of $3.21.

But that’s not all. You’ll absolutely want to factor in the cost of your time in this transaction. The median hourly wage across the US in 2016 was $17.81. If you estimate your trip, travel time and bank experience included, to take around 30 minutes, you’re looking at a time expense of $8.90 every time you make a deposit. For those keeping track at home, we’re now at $12.11 per bank run.

Playing the Waiting Game

Time is money. Especially when the very thing you are waiting for is money. When you accept rent via paper check, it’s a slow process with several factors at play. The first of those being the tenant. Will they have the forethought to mail in their rental payment ahead of time, so that it will be hitting your inbox at the precise time it’s due? Not likely. It’s more probable that they will mail the check out on the due date, adding several days right off the bat to your waiting game.

Next, you’ll have to wait for the bank. Generally speaking, this means you’ll need to tack on 3-5 days to your timeline to allow for the depositing bank to confirm funds with the issuing bank and eventually make the transfer. In this scenario, it could take upwards of a week from the rental due date to actually gain access to those funds.

Not only is the amount of time you spend waiting for checks too great, but it’s also notoriously unpredictable. Again, you’re waiting on tenants to make the first move, with no guarantee as to what action they might take. And with the not uncommon problem of late-paying renters, that’s a whole new ballgame.

Check Yourself

When you put all the chips on the table and count it up, the cost is clear. Doing business with paper checks is becoming a thing of the past for good reason. It’s costly, time consuming, and ultimately unpredictable.

When you make the switch to ACH payments or eChecks, not only are the associated costs clearly laid out upfront, but they are also significantly less than the cost of processing checks on your own. And with companies like Innago, they can even be 100% free for landlords.

So, when it comes to accepting rent payment by paper check and the associated costs, the old saying most definitely does not hold up. You don’t get what you pay for, because you’re paying way too much!