8 ways to reduce rent payment arrears

Payment arrears are every landlord’s nightmare. One tenant paying late might be tolerable. But when several tenants start falling behind, your business cash flow is immediately affected. Utility bills and operational costs still need to be paid—often from your own pocket.

Based on conversations with landlords across various cities, payment arrears are one of the most common problems. The good news is that this can be minimized with the right system. Not by collecting more aggressively, but by building a system that makes on-time payment easier for tenants.

In this article, you’ll learn 8 effective ways to reduce rent payment arrears. From prevention before tenants move in, to handling situations when arrears have already occurred.

1. Screen tenants more carefully

The most effective way to reduce arrears is to prevent them from the start. And that begins with the tenant screening process.

Why screening matters

Not everyone is a good tenant. Some have a history of late payments at previous places. Some have unstable income. Others have no intention of paying in full from the beginning.

With proper screening, you can identify potential problems before accepting a tenant. This isn’t about distrust—it’s about protecting your business.

How to screen tenants

Basic questions to ask:

What is your main occupation? (student, employee, freelancer)
What is your source of income for paying rent?
Have you rented before? Where? Why did you move?
Who can we contact in case of emergency?

Warning signs of risky tenants:

Reluctant to provide emergency contact information
Cannot clearly explain their source of income
Asks for many concessions upfront (discounts, partial payment, etc.)
History of frequently moving in a short period

With Kamaru’s ID scanning feature, you can store complete tenant data from the start. This makes verification and documentation easier for future reference.

2. Set clear due dates

It sounds trivial, but many landlords don’t have clear due dates. “Pay at the beginning of the month” could mean the 1st, the 5th, or even the 10th depending on the tenant’s interpretation.

Impact of unclear dates

When due dates aren’t specific, tenants tend to delay. “The beginning of the month hasn’t passed yet” becomes a common excuse. You also have difficulty determining when to start reminding—is the 3rd already late? Or still within reasonable limits?

How to set due dates

Choose a specific and consistent date:

The 1st — Most common, easy to remember
The 5th — Provides a buffer for tenants who get paid at month-end
Based on move-in date — For example, tenant moves in on the 15th, due date is every 15th

Communicate clearly from the start:

Include the due date in the rental contract. Remind tenants when they first move in. Post the information in visible areas if needed.

Define consequences for late payment:

Late fees (for example, $1-2/day or 5% of total rent)
Maximum delay before eviction proceedings
Collection procedures that will be followed

With Kamaru’s occupancy calendar, you can view all tenant lease schedules in one display. This makes it easy to know who’s coming up for payment this week—so you know exactly who needs a reminder.

3. Offer multiple payment methods

One reason tenants pay late is inconvenient payment methods. If you only accept transfers to one specific bank, tenants without accounts at that bank have to pay inter-bank transfer fees or find specific ATMs.

Payment methods to offer

Bank transfer:

Provide at least 2-3 different bank options
Consider digital banks for younger tenants

Digital wallets:

PayPal, Venmo, Zelle, or local e-wallet options
Convenient for younger tenants
Often allows instant transfers

QR code payments:

One QR code for multiple payment methods
Practical as tenants can scan directly
Available free from various banks and payment providers

Cash:

Still relevant for some tenants
Set specific times and places for cash collection
Always provide receipts

Implementation tips

Don’t offer so many options that it becomes confusing. 2-3 main methods are enough. What matters is that available options match the habits of most of your tenants.

Make payment information easily accessible. Post it in common areas, save it in group chats, or send it along with payment reminders.

4. Send reminders before the due date

Don’t wait until after the due date to remind tenants. Send reminders a few days beforehand to give tenants time to prepare payment.

Effective reminder schedule

3 days before due date: First reminder that’s informative. “Hello, this is a reminder that rent payment for this month is due on [date].”

1 day before or on due date: Second reminder for confirmation. “Tomorrow/today is the rent payment due date. Please complete your payment soon.”

1 day after if unpaid: Follow-up for those who haven’t paid. “We haven’t received your rent payment. Please complete it soon to avoid late fees.”

Reminder message templates

3-day reminder (friendly):

Hi [Name],

This is a reminder that rent payment for Room [Number] for [Month]
is due on [Date].

Amount: $[Amount]
Account: [Bank] [Number] - [Name]

Thank you.

1-day overdue (firmer):

Hi [Name],

Rent payment for [Month] has passed the due date.
Please complete your payment soon to avoid late fees.

If you've already paid, please disregard this message and send proof of transfer.

Thank you.

Use a professional but non-aggressive tone. The goal is to remind, not to scold.

Send reminders manually via text message or email. What matters is consistency—send at the same time every month. With Kamaru, you can see the payment status of each tenant, making it easy to know who needs a reminder.

5. Offer advance payment options

For tenants with irregular income—such as freelancers, business owners, or students with inconsistent allowances—consider offering advance payment options.

Benefits of advance payment

For landlords:

Payment certainty for several months ahead
Reduced risk of arrears
More predictable cash flow

For tenants:

No need to manage finances every month
Can pay when they have extra money
Often receive discounts or bonuses

How to implement this system

Provide attractive incentives:

Pay 6 months upfront, get 2 weeks free
Pay 12 months upfront, get 1 month free
5% discount for 3-month advance payment

Make calculations clear: Don’t let discounts be so large that they reduce your margin. Calculate the value of payment certainty and subtract from there.

Offer, don’t force: Not all tenants can or want to pay in advance. This is just an additional option, not a requirement.

6. Build good relationships with tenants

Tenants who have good relationships with their landlord tend to feel more uncomfortable when they pay late. Conversely, tenants who feel treated like “walking ATMs” won’t hesitate to delay payment.

How to build good relationships

Be responsive to complaints: When tenants report problems—AC leaking, water outage, slow WiFi—respond quickly. Don’t let complaints hang for days without response.

Maintain facilities well: A well-maintained property shows that you care. Tenants living in well-kept places will appreciate it more and be more motivated to pay on time.

Communicate politely: Use polite language in every communication. Avoid blaming or condescending tones, even when tenants are paying late.

Know your tenants: You don’t need to be close friends, but knowing names and a bit of background helps build rapport. “How are your studies going?” or “Started at the new job yet?” shows you care.

Impact on payments

Tenants who feel valued will feel more uncomfortable being late. They know that behind the bill is a person who also has needs. This isn’t a 100% guarantee, but generally good relationships reduce arrears incidents.

7. Handle arrears with a consistent system

When arrears occur, consistent handling is crucial. Don’t be too lenient with one tenant but strict with another. This inconsistency will spread and make other tenants feel they can “negotiate” too.

Stages of handling arrears

Days 1-3: Friendly reminder Maybe the tenant just forgot or was busy. Send a reminder with a polite tone and ask if there are any issues.

Days 4-7: Firm reminder If there’s no response, increase urgency. Remind them about applicable late fees.

Days 8-14: Direct communication Contact the tenant directly (phone call or face-to-face). Ask what the problem is and when it can be resolved. Create a written agreement if needed.

More than 2 weeks: Further action If there’s no good faith effort, consider more serious options—formal notice, contract termination, or legal steps if necessary.

Document all communications

Keep records of every interaction related to arrears:

Dates reminders were sent
Tenant’s response (if any)
Payment promises made
Actions taken

This documentation is important if the problem escalates to more serious stages.

Be firm but fair

Consistency doesn’t mean no empathy. If a tenant is experiencing genuine problems—job loss, illness, or family emergency—consider giving flexibility. But ensure there’s a written agreement about when and how arrears will be paid off.

8. Use an organized recording system

Many arrears that don’t need to happen—or last too long—occur because of messy record-keeping. You don’t know who has paid, who hasn’t, and how long arrears have been going on.

Problems with manual recording

Complex spreadsheets: Rows and columns that keep growing, formulas that error, or files accidentally deleted. Spreadsheets can work for small properties, but the bigger the business, the bigger the risk.

Scattered notes: Payments in a notebook, tenant data on your phone, contracts in different folders. When you need complete information, you have to search multiple places.

Relying on memory: “I think Mr. Smith paid last week.” Memory can be wrong, especially when managing dozens of tenants.

Solution: An integrated system

With a property management app like Kamaru, all information is stored in one place:

Property dashboard: View all properties and rooms in one display. Know exactly which rooms are occupied and which are vacant.

Complete tenant data: Tenant information including ID photos stored securely. Accessible anytime from your phone or computer.

Payment history: Record each incoming payment with clear status—paid in full, partial, or unpaid. See directly who needs follow-up without checking one by one.

Occupancy calendar: Visualize lease schedules across all properties. Easily see who’s due next week.

The time investment for initial setup will save lots of time and reduce errors in the long run.

Additional tips to prevent arrears

Create clear contracts

Rental contracts should include:

Specific due dates
Rent amount and what’s included
Late fees and how they’re calculated
Consequences of prolonged arrears
Dispute resolution procedures

Clear contracts protect both parties and serve as reference when problems arise.

Collect adequate deposits

Deposits aren’t just guarantees for damages. They’re also a buffer for arrears. Standard deposits are 1-2 months’ rent. Financial advisors recommend having emergency funds before renting—so requesting deposits is a reasonable practice. Don’t hesitate to refuse potential tenants who can’t pay deposits—this could be a sign of bigger financial inability.

If utility bills are separate from rent, ensure the calculation system is transparent. Many disputes stem from unclear utility costs. Use sub-meters or divide evenly with a formula agreed upon from the start.

Keep communication open

Create easily accessible communication channels—group chats or at least a number that’s always active. Tenants who feel they can communicate easily will be more open when facing financial problems, so you can find solutions together before arrears pile up.

Common mistakes in handling arrears

Being too lenient from the start

Giving flexibility without being asked can set a bad precedent. Tenants will think deadlines aren’t really deadlines. Stay consistent with established rules.

Being too harsh without empathy

Conversely, being too harsh can damage relationships and make tenants defensive. Listen to their reasons before taking action. Sometimes solutions can be found through good discussion.

Not documenting

Without documentation, you have no evidence if problems continue. Save all evidence of communications, payment promises, and actions taken.

Treating all cases the same

Each arrears case can be different. A long-term tenant who has always been on time and is late just once is certainly different from a new tenant who’s already late in their second month. Consider context before taking action.

FAQ

What’s a reasonable late fee amount?

Common standards are $1-5 per day or 5-10% of total rent per month of delay. What matters is that the fee is large enough to be a disincentive, but not so large that it burdens tenants who are genuinely struggling.

When should you end the relationship with a frequently late tenant?

If the late payment pattern keeps repeating (more than 3 times in 6 months) despite warnings, consider not renewing the contract. Tenants who can’t maintain payment commitments will continue to be a problem.

How do you collect arrears without damaging relationships?

Use a professional, not personal tone. Focus on facts (“we haven’t received your payment”) not accusations (“you haven’t paid”). Offer solutions (“is there an issue? Can we discuss?”) not ultimatums.

Is it okay to lock out a tenant who doesn’t pay?

Legally, this is a gray area and can cause problems. In most jurisdictions, landlords must follow proper eviction procedures—even when tenants haven’t paid. Locking out tenants unilaterally may be considered illegal self-help. It’s better to use proper channels—communication, formal notices, and if necessary, legal assistance.

What about tenants who have valid reasons but still can’t pay?

Create a written agreement for installment payments. For example, pay half this week, the rest next week. Ensure there’s a clear timeline and consequences if not met.

Should you use collection agencies?

For typical boarding houses, this is usually overkill and can damage your reputation. It’s better to handle it yourself with a consistent system or use legal channels if the amount is significant enough.

Conclusion

Payment arrears are a problem that can be minimized with the right system. The key lies in three things: prevention (tenant screening, clear rules), early detection (reminders, organized recording), and consistent handling (fair and documented procedures).

No system can 100% prevent arrears. But with the steps above, you can significantly reduce their frequency and impact.

Ready to manage your property more efficiently? Try Kamaru free today. Record tenants, monitor occupancy, and manage your properties in one app. Setup takes just 5 minutes, no credit card required.