Automatic Direct Debit and Standing Order for Rent: How to set it up and manage it

Regular and trouble-free rent collection is the basis of successful renting. Manually checking incoming payments, reminding tenants and tracking unpaid amounts costs time and nerves. Fortunately, there are several ways to automate the whole process.

In this article, we will compare the three main methods of automatic payment - standing order, SIPO and direct debit. We'll show you how to set each one up, what their advantages and disadvantages are, and how to effectively manage payments from multiple tenants.

Overview of Payment Methods

Standing Payment Order

What it is: A standing order (standing payment order) is an instruction from the tenant to their bank to periodically send a specified amount to the landlord's account in of the term.

Key features:

• It is entered by the tenant in his internet banking
• Fixed amount and maturity date
• The tenant can cancel or change the order at any time
• No fees (for most banks as part of standard services)

SIPO (Centralized collection of payments from the population)

What is it: SIPO is a service Czech Post, which allows regular payments (rent, energy, insurance premiums, etc.) to be combined into one monthly payment.

Key features:

• Administered by Czech Post
• Connection number SIPO
• The payment includes a breakdown of individual items
• Option to pay in cash at the post office, by transfer and direct debit

Collection (SEPA Direct Debit)

What is it is: Inkaso is the landlord's authorization to deduct a specified amount from the tenant's account. Tenant must provide consent (mandate).

Key features:

• Initiated by lessor (creditor)
• Tenant gives consent (mandate to collect)
• Lessor has more control over timing and amount of payment
• Charges on the part of the beneficiary (lessor)

Comparison of methods

Criterion	Standing order	SIPO	Collection
Who initiates	Tenant	Czech Post	Landlord
Settings	Easy	Moderately complex	More complex
Flexibility of amount	Necessary change by tenant	Change via administrator	The lessor changes
Fees	No fees	Low (approx. 10–20 Kč/month)	Higher (depends on the bank)
Landlord Check	Low	Medium	High
Reliability	Good	High	High
Suitability for multiple tenants	Good	Excellent	Excellent
Risk of cancellation by the tenant	Yes, anytime	Yes	Yes (revocation of the mandate)

Standing order: Detailed instructions

How the tenant sets up a standing order

Step 1: Preparation of data

Give the following data to the tenant:

• Landlord account number (in IBAN format for foreign payments)
• Bank code
• Amount to be paid (rent + advance payments on services)
• Variable symbol (see below)
• Date of first payment
• Periodicity (monthly)
• Maturity date (e.g. on the 1st or 15th of the month)

Step 2: Settings in internet banking

Most banks allow you to set up a standing order online:

1. Login to internet banking
2. Section "Standing orders" or "Payments"
3. New Standing Order
4. Filling in data (beneficiary account, amount, VS, date, periodicity)
5. Confirmation (SMS code, certificate)

Step 3: Verification

After setting, recommend the tenant to verify:

• Correct account number
• Correct amount
• Correct variable symbol
• Date of first payment
• Periodicity (monthly)

Advantages of standing order

• Free with most banks
• Simple setup
• The tenant has an overview of their banking
• It works reliably

Disadvantages of a standing order

• When the rent changes, the tenant must adjust the order
• The landlord has no control over the timing
• The tenant can cancel the order without notice
• Risk of omission of the adjustment when changing service deposits

SIPO: Detailed instructions

How to set up SIPO

Step 1: Beneficiary registration

As a lessor, you must register with Czech Post as a recipient of payments SIPO:

1. Contact a branch of the Czech Post or visit the website postonline.cz
2. Fill out the registration form
3. Sign a contract for SIPO
4. You will receive a beneficiary number

Step 2: Tenant login

1. The tenant must have been assigned the connection number SIPO
2. If he does not have it, he will ask for it to be assigned to post office
3. As a landlord, you register your payment under the tenant's connection number
4. You enter the amount, periodicity and description of the payment

Step 3: Regular updates

• Notify the Czech Post of changes in amounts in time (at least 20 days before the due date)
• Report the termination of the rental relationship
• Update advance payments for services after billing

Advantages of SIPO

• Reliable and established system
• Tenant everything is paid at once (rent, energy, insurance premiums)
• Czech Post records payments
• Possibility of cash payment at the post office (suitable for older tenants)
• Automatic reminders in case of non-payment

Disadvantages of SIPO

• Administration during setup
• Service fees
• Necessity to report changes in time
• Slower processing than bank transfer
• Less widespread in of younger tenants

Direct debit: Detailed instructions

How to set up direct debit

Step 1: Tenant's consent (mandate)

The tenant must set up direct debit consent in his bank:

1. In Internet banking, you will find the "Debit" or "Debit Agreement" section
2. Enter the landlord's account number
3. Sets the limit (maximum amount per direct debit)
4. Alternatively, it will limit to a specific variable symbol
5. Confirms consent

Step 2: Settings on the lessor's side

The lessor must have an active direct debit service with their bank:

1. Contact your bank to activate the

2 direct debit service. Some banks require a direct debit agreement

1. Find out the fees (typically Kč 5-15 per transaction)
2. Set up direct debit with tenant details

Step 3: Regular direct debit

Every month:

1. You enter a direct debit order (amount, tenant account, VS, date)
2. The tenant's bank will check (consent, limit, sufficient funds)
3. If everything is correct, the amount is credited to your account
4. If not (lack of funds, limit exceeded), direct debit is rejected

Advantages of direct debit

• Lessor has control over amount and timing
• Easy change of amount (after service billing)
• Automation for multiple tenants
• Overview of successful/unsuccessful direct debits

Disadvantages of direct debit

• Fees for transaction
• Tenant can withdraw consent
• More complex setup
• Not all banks offer direct debit service for individuals
• Tenants may be concerned about "access to their account"

Variable symbol system

Why use variable symbols

Variable Symbol (VS) is a key payment identifier. The correct VS system allows you to:

• Automatically identify who the payment came from
• Match payments with specific apartments and tenants
• Easily find out missing payments
• Automate accounting processing

Recommended system VS

Structure: XXYYMM or XXYY

• XX = apartment or tenant number (01, 02, 03...)
• YY = year (25 for 2025)
• MM = month (01-12)

Example:

• Apartment No. 1, January 2025: VS 012501
• Apartment No. 3, March 2025: VS 032503
• Or more simply: Apartment No. 1 = VS 101, Flat No. 3 = VS 103 (permanent VS)

Permanent vs. changing VS

Permanent VS (recommended):

• Each apartment/tenant has its own unique VS
• VS does not change – easier for the tenant
• Payment identification according to VS + credit date

Changing VS:

• VS contains the month and year of payment
• More accurate identification, but more complicated for the tenant
• Higher risk of error (tenant forgets to change)

Standing Order Tip

Recommend tenants standing VS. With a standing order, the VS is entered once and does not change - a changing VS would have to be manually adjusted by the tenant every month, which is impractical and error-prone.

Dealing with late payments

Prevention

The best strategy is prevention:

• Clearly set the due date in the contract (e.g. on the 1st of the month)
• Recommend tenant automation (standing order/debit)
• Set standing order to leave 2-3 days before due
• Include late payment penalties in lease (late interest)

Payment monitoring

Daily routine (5 minutes):

• Check incoming payments on account
• Compare with expected by payments

Monthly check:

• After the due date, check who paid and who didn't
• Identify missing payments by VS
• Contact tenants with missing payment

Non-payment procedure

Due day + 3 days:

• SMS or email: "Hello, I register that the rent payment for [month] has not yet arrived. Please check."

Due date + 7 days:

• Phone call: Find out the reason and agree on a payment date

Due date + 14 days:

• Written reminder (recommended): Formal request for payment with notice of interest on late payment

Due date + 30 days or more:

• Consider legal steps
• Consult a lawyer
• Prepare documents for a possible termination of the lease

Late payment interest

Late-payment interest may accrue from the first day of delay where the legal conditions are met. Use the rate prescribed by the current government regulation for the relevant period; do not hard-code a CNB rate or fixed example.

• In 30 days: approx. 154 Kč

Management of payments from multiple tenants

Separate account for rentals

If you rent several apartments, set up a separate bank account exclusively for rental income:

• Clearer records
• Simpler accounting and tax return
• Easier control of incoming payments
• Personal and landlord finance department

Payment tracking spreadsheet

Create a simple spreadsheet (Excel, Google Sheets):

Apartment	Tenant	VS	Rent	January	February	March	...
Flat 1	Novak	101	15,000	OK	OK	OK
Apartment 2	Svobodová	102	12,500	OK	LATE	OK
Flat 3	Dvořák	103	18,000	OK	OK	-

Automation of overview

Use internet banking options:

• Notifications: Set SMS/email alerts for incoming payments
• Statements: Download monthly statements in CSV format for import into tables
• Categorization: Some banks allow automatic categorization of payments by VS

Specialized software

For management for more properties, consider specialized software:

• Automatic payment matching
• Reminder generation
• Rental contract records
• Utility bills
• Tax reports

Bank payment matching

What is payment matching

Payment matching (reconciliation) is the process of matching incoming payments to specific tenants and apartments. If the VS system is set up correctly, this process is simple.

Automatic matching

Some banking systems and accounting programs allow automatic matching:

1. You define the expected payments (amount, VS, frequency)
2. The system automatically compares incoming payments with expected
3. Notify you of unpaired or missing payments

Manual pairing

If you don't have an automatic system:

1. Download the account statement (CSV or PDF)
2. Compare with your tenant record
3. Mark paid payments
4. Identify missing or incorrect payments
5. Contact tenants with discrepancies

Common problems and their solutions

Problem 1: Payment without a variable symbol

Solution:

• Identify the payment by the amount and the sender's account number
• Contact the tenant and ask for a VS supplement for the next time
• Manually assign the payment to the records

Problem 2: Wrong amount

Solution:

• If the amount is lower - contact the tenant and ask for an additional payment
• If it is higher - return the overpayment or take into account in the next month
• Check if the tenant updated the standing order after changing the deposits

Problem 3: The payment came late

Solution:

• Find out the reason (wrong standing order setting, lack of funds)
• Advise the tenant to set the order 2-3 days earlier
• If repeatedly delayed, consider late payment interest

Problem 4: The tenant canceled the standing order

Solution:

• Contact the tenant and find out the reason
• Request a reset
• Consider switching to direct debit (larger check)
• Document for future disputes

Problem 5: Duplicate payment

Solution:

• Inform the tenant about the duplication
• Return the overpayment to his account
• Or arrange a credit for the next month

Digital tools for managing payments

Internet banking

Use the full functions of your internet banking:

• Notification of incoming payments
• Transaction history with filter by VS
• Data export for accounting
• Templates for recurring payments

Mobile banking

• Instant overview of account status
• Push notifications about payments
• Quick response to problems

Accounting software

For landlords with multiple properties:

• Automatic payment matching
• Generate invoices and reminder
• Record contracts and documents
• Prepare tax return

Summary and recommendations

For landlords with 1-2 apartments

• Recommended method: Standing order
• Simple, free, reliable
• Track payments manually or with a simple table
• Set up a permanent variable symbol

For landlords with 3-10 apartments

• Recommended method: Standing order + separate bank account
• Create a VS system and tracking spreadsheet
• Consider basic accounting software
• Set up bank notifications

For landlords with 10+ apartments

• Recommended method: Direct debit or specialized software
• Automate payment matching
• Use professional management tools
• Consider outsourcing management to a management company

Key principles:

• Always use variable symbols to identify payments
• Recommend automation to tenants (standing order no later than 3 days before due)
• Respond to missing payments quickly but professionally
• Lead clear record of all payments
• Separate personal and landlord finances
• Regularly check and update payment settings

Automating rent collection saves you hours of work per month and eliminates most problems associated with late or missing payments. Investing in the right settings will pay you back many times over in saved time and more restful sleep.

How Grento can help you

Grento is the most comprehensive Czech real estate management platform that will help you with automatic matching of bank payments. Connection with more than 20 Czech banks and an immediate overview of paid and outstanding payments. Try Grento for free and see for yourself.

> Czech-law scope and editorial note: Legal, tax, accounting, tenancy, service-charge, condominium, metrology, insurance and data-protection statements in this article refer to the Czech Republic and the rules effective for the relevant date. Figures and examples are illustrative, not legal or tax advice. Verify current rules with the relevant Czech authority or a qualified adviser.