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5 Steps to Keeping Self-Storage Collections to a Minimum
Posted 10/14/2015
Author Tron Jordheim
Link www.insideselfstorage.com/articles/2015/10/5-steps-to-keeping-selfstorage-collections-to-a-minimum.aspx
 
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5 Steps to Keeping Self-Storage Collections to a Minimum

If there’s one thing we know in the self-storage industry, it’s that when a tenant gets behind on the rent, it can be challenging to save the situation. I don’t know if anyone has done a scientific study on this, but I would bet few people who become 30-plus days late on their bill ever get caught up.

So, let’s not let that happen! Instead, let’s keep collections to a minimum. Here are a few tried and true suggestions, plus a few new ones, to help you keep tenants current on their rental payments.

Make it Easy to Pay

Take all forms of payment: cash, checks, credit cards, debit cards, PayPal, electronic funds transfer and Automated Clearing House. Use online billpay, auto-charge and prepay. Not all of these will be easy to set up, so pehaps you can’t offer them all. But do make it easy for people to pay you. Encourage tenants to set you up as a payee in their bank’s bill-pay system, if they use one.

Also, make sure staff is available in the office when the rent is due. If you do first-of-the-month billing, set up extended office hours on the last and first days of each month.

Use Reminders

Use all means at your disposal to let customers know the rent is due. Post it on Facebook, e-mail your tenants, put it on your phone’s interactive greeting, send automated calls and text messages, and post a sign on the property noting when rent is due.

Just make sure you’re doing all of these legally. Some of these methods require an opt-in from customers. You can put language in your lease allowing for these communications. Check your local regulations to make sure you’re in compliance. If you have a “smart” CRM (customer-relationship management) and accounting system, reminders will be limited to renters who haven’t yet paid, which avoids making you look bad to those whose accounts are current.

Limit Access and Avoid Fees

How soon do you deny facility access to tenants who are late? After one day, three days? Your gate is a powerful tool. I recommend denying access on the day after rent is due, just to get the attention of anyone who’s delinquent. If people find this annoying, you can tell them this is your way of ensuring they’re not assessed late fees or collection charges. Your customers will find late fees far more annoying than denied access.

Send additional reminders to people who are late but still within the grace period. Use every means available to let them know you haven’t received a payment and a late fee is coming soon.

If you haven’t set up an aggressive late- and collection-fee schedule, do that now. Check with your state association or attorney to make sure you’re following local regulations and statutes, and then post your policy in your lease. Make sure tenants understand, when they sign the lease, that it will get expensive if they pay late.

Save people from fees by over-communicating with them until they pay. There was a time when storage companies loved late fees and saw them as extra revenue. That is so 1990. It’s far better to keep tenants long-term and have them pay on time than to collect late fees. In this world of instant social media contact, you want customers telling their online friends about how nice you were to save them from fees instead of what a jerk you were for charging them.

Go to Auction Quickly

Move your lien process as quickly as local statues will allow. The faster you cure a delinquency, the less hassle it is for everyone, and the faster you can get that unit generating revenue again. If your process is quick and consistent, customers will know they can’t stretch you out for past-due rent, and they’ll try very hard to avoid being in that position.

Sometimes it’s better to make someone an offer to move them out than it is to go to auction. You may collect more money this way and will definitely get the unit back into revenue mode more quickly. The tricky situations are those in which you can’t find the tenant to offer him a deal. If you’re careful about getting good contact info from new customers when they sign the lease, as well as alternate phone numbers and e-mail addresses, you’ll have fewer situations in which a tenant is unreachable. Just be careful about tenants who are on active military duty or filing bankruptcy. Again, follow your state statute.

Some of this may be old hat, but it’s all worth a review. Are you making it easy for customers to pay their bill? Are you reminding them rent will be due soon? Do you use your gate to get your point across? Are you actively saving people from late fees? Are you moving through your lien process as quickly as possible? If you answered yes to all of these, you should have hardly any delinquencies, and even those should be well under control.

About the Author:

Tron Jordheim is the founder and CEO of Tron Jordheim Enterprises. He has a long track record in management, marketing, sales and public-relations innovations. In his 15-year tenure as the director of the PhoneSmart self-storage call center and chief marketing officer of StorageMart, he’s developed a deep understanding of the self-storage customer. To reach him, call 573.268.5217 or connect at https://www.linkedin.com/in/tronjordheim.

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