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The importance of credit checks for your clients
When you knew that a client was about to go broke, would you grant 30 day credit? You know that a client pays others very late, wouldn't you be expecting punctuality? Loan officers know that credit checks increase rather than decrease revenue because they intensify marketing effort with healthy clients rather than wasting it on a crowd of unfamiliar leads.
Credit risks are managed for two main reasons: Financially: The profits are boosted by fewer defaults on receivables and fewer loans.
Landlord: Five mysteries to ensure that your renters are paying every month on time.
It is essential for your rental company to receive your rental payment on schedule every single day of the year. Unfortunately, it is also an issue over which many lessors have little influence: they wait every months to see if and when their renters choose to make payment. Unless renters punctually repay their rents, many lessors believe that the only way is to sell these renters.
Although it is an optional measure, it should only be used as a last option as it requires a lot of patience, cost and work. The National Landlords Association says it averages four month and £900 to end a lease. These are only the costs of the courts and lawyers - not the losses of rent and also the effects of arrears on mortgages.
You may also be struggling to meet your other costs, which depend on you getting the lease payment on schedule. Nevertheless, with 68,000 renters currently more than two month behind their rents, something needs to be done. What can you do if your renters do not make their payment on schedule?
We have put together our five best advice so that your renters can make their rental payment on schedule. Communications are of crucial importance in all areas of the lessor - especially with regard to rental payment. Be sure you know when the rental is due. They should also indicate any charges or other implications for delayed payment of the rental.
It will help ensure that renters do not end up having to foot the bill too early just because they were not sure when their rental was due. They also help your renters calculate their budgets for their rent: they should know exactly how much to charge and when to use it. Isn' it that they do not have enough cash to cover the rental, or that they have just forgot when the rental is due?
As an example, some lessees may choose to make more regular smaller repayments. If you ask your lessees to create a direct debit or permanent order, the likelihood of them failing to make a deposit is reduced. Attempt to plan your repayments for a date and rate that correspond to the renter.
As soon as a direct debit or permanent order has been established, your renters no longer have to bother to remember to foot the bill every single months. In addition, you no longer have to spend your money tracking delayed payment. Collecting a charge for delayed payment can help encourage renters to punctually make their rental payment.
Ensure that all charges for delayed charges are clearly indicated in the tenancy agreement. Loan review offices now offer lessors the opportunity to notify the progress of tenancy settlements. It is another powerful stimulus for renters to punctually repay their rent: they will want to keep their credit rating as good as possible.
They can also award renters who always punctually pays their rent: they are awarded a better point rating, which gives them easier crediting. Tip: If a lessee is in default with his mortgage due, let him know that you plan to declare his mortgage overdue. That can convince them to start paying their rents earlier rather than later.
Think about giving your renters a small rebate on timely payment of their rental. With a small rebate you can motivate your renters to make the payment on schedule. They also benefit you because they significantly reduce the amount of money you need to track. One good way to do this would be to give a rebate on direct debits or permanent orders.
Either way, your rental can be debited from your account every monthly when due. In addition, you will always be informed if a direct debit transaction has been unsuccessful. That means you know exactly what is happening without having to waste every single months reviewing your account history. Sometimes, despite all effort, a lessee pays his rental even after the period has expired.
For more information on whether direct debit can help you get your renters to punctually payment their rental, see our earlier article on direct debit for rental companies and rental agencies.