Bank/Check Drafting Services
Write the Rent Check to
Automatic drafting is an arrangement in
which a party can issue an order to his bank to draft his checking or
other account on a periodic basis to the order of another party.
From the landlordís point of view, this means that it is possible for
the tenant to issue an order to his bank to pay his rent monthly out of a
specific account maintained at that bank. The bank will, on a
periodic basis specified by the parties, issue a draft that is sent to the
landlord, usually by mail, which he can then deposit with his own bank for
collection, or, as is becoming increasingly common, electronically
transmit the funds to the landlordís bank, which his bank will then
deposit into an account specified by the tenant in his order to the drawee
bank. In the case of electronic transfers, a number of methods may
be used as between the parties to notify each other of the transaction.
The landlord might notify the tenant by issuing a receipt, for example.
The landlord would be notified of the transfer by his own bank in a
statement of account.
Automatic drafting streamlines payment and makes it more convenient.
It is not a form of securing payment, as the landlordís recourse in the
event the funds are not in the tenantís account is against the tenant
for non-payment of rent, and gives the landlord no more security than he
would have under any other circumstance. Companies that have a large
number of accounts, each paying a small amount of money on a periodic
basis, where the costs of individual invoicing, processing delayed
payments, and tracking down stray payments would be a large proportion of
the amount billed use this payment method the most often. However,
it is also a good device for eliminating delays that happen, as, for
example, owing to inefficient mail delivery, or for goodwill, by making
payment more convenient and giving the tenant confidence that his payment
will not be lost or delayed in the mail.