By M. Anne Ballard and Stacie Maxwell
Delinquencies and collections are a challenge for all self-storage operators. The keys to managing these tasks and minimizing problems with non-paying tenants are prevention, consistency, communication, courtesy and persistence. The following tips will help facility managers succeed in mitigating and collecting unpaid rent.
When it comes to self-storage delinquencies, prevention is preferred, and it all starts with the information you collect from each customer. At the time of unit rental, gather all critical customer data including name, phone numbers, e-mail addresses, employer info, emergency contacts, etc. This is the single most important measure to avoid delinquencies and lien sales. The customers whose goods go to auction are typically those with bad addresses and faulty phone numbers.
To confirm the customer’s address, send him a thank-you card on the day of rental. This will confirm you have a real address and will thank the customer in a personal way. If the card comes back to you for a bad address, overlock the customer’s unit immediately and start making calls to contact him.
You also need to confirm the customer’s phone number and e-mail address, so send a welcome e-mail and make a call as well. If any of the information is faulty, overlock the unit immediately. Don’t wait for a full month’s rent to become past due before taking action. You need to know immediately if there’s a problem and start contacting the customer to correct the issue.
At move-in, mention when rent is due, but don’t indicate when it becomes late. For example, if rent is due on the first of the month and late after the fifth, divulging this to the customer implants the notion that he has until the fifth to pay. Simply say, “Your rent will be due on the first of each month. If the payment is late, you will incur a late fee.” This sets the terms of your rental agreement without giving the customer a possible window for late payment.
You should also offer an auto-debit payment option with a “no late fee guarantee.” In this scenario, the customer avoids late fees as long as he provides current credit card info and authorization for monthly payments. The “guarantee” is null and void if his card on file expires or is declined.
You should also point out your auction calendar to new customers as an additional prevention measure. By showing them your monthly ad of units to be sold at auction, you show them what happens when they don’t pay. Invite them to sign up for your auction e-mails as well.
Have one set of payment and auction rules to which everyone should adhere and post them for all to see. Your rental agreement contains a set of rules that apply to every one who signs it, so make sure you consistently apply those rules to each and every customer. By posting a set of rules and sticking to it, everyone knows from the very beginning what will happen and when.
Avoid making exceptions for certain customers, for example, not overlocking someone because you know them from your child’s school, your church, a local store, etc., will only create problems. Making a stand behind a steadfast wall is easy; trying to make a stand behind a moving target (inconsistent rules) is difficult for managers to do, and even more difficult for customers to understand. Make one set of collections standards and adhere to them.