The cash-strapped U.S. Postal Service just announced it will slow first class mail delivery to 2 or 3 days.
That means landlords relying on paper checks may be receiving rent a day or so later than expected.
As the postal service struggles to correct what it has described as a flawed business model, with losses spurred by a significant decline in use due to online transactions, some fear this move may actually be a deadly mistake that will only force more customers into using e-transactions, thus further reducing the volume of traditional mail.
The next move slated for the Postal Service is to close over half of its 450 processing plants, and to layoff about 28,000 workers by end of year 2012, although the process may take longer. The USPS must reduce its operating costs by $20 billion by 2015 in order to return to profitability, according to David Williams, vice president, Network Operations.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
With these slowdowns at hand, it may be time for landlords to re-think the traditional paper rent check, or take steps to reduce the likelihood of late rent payments.
Electronic payment is the most obvious alternative for rent collection. These methods–automatic withdrawals, credit card payments, and e-checks, offer other advantages as well. For instance, rent payments make it on time even if the tenant is travelling over the holidays.
Those who stay with paper rent check collection may in time need to consider changes to the lease agreement. For instance, the typical five day late-payment grace period may no longer be realistic.
Over time, landlords relying on paper checks also may want to reconsider the payment dates for rent. While the traditional method is to pay at the end of the month, using the tenant’s end-of-month paycheck, if these postal delays continue or worsen, that could mean late mortgage payments for landlords. If a tenant has the ability to pay mid-month, that may be a safer option.
It is critical for landlords to keep up the pressure on tenants to pay on time. Reminders can help tenants stay on schedule by dropping checks in the mail as early as possible. Landlords also can reinforce their tenant’s accountability if they Report Tenant Pay Habits. If a tenant mails the check late, they will suffer the consequences of a poor rental history.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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