Show Me the Money! 9 Techniques for Effective Self-Storage Collections

One of the most frustrating and stressful concerns for self-storage managers is collecting rent from delinquent tenants. And it’s no wonder, since very few owners provide their staff with high-quality, high-impact, effective collections training. Telling managers, “Here’s the past-due list. Call these folks. Good luck,” is not program. It’s unfair for supervisors to expect managers to maximize collections without giving them the tools to succeed.

You’d think collections would be relatively easy, since the facility operator has all the leverage. We have their stuff! We don’t have to go chasing down merchandise or get into “Repo Man” mode. So why do so many managers fail to maximize collections, and why are so many of you frustrated with this all-important task? You don’t have an effective system.

Some folks are born salespeople, but very few are born to collect money. It’s not a natural skill. No one likes to do it, and no one really should. Who wants to call people about paying a bill? But with an effective system, anyone—well, almost anyone—will increase revenue and decrease the frustration of constantly dealing with the same past-due customers.

While this article doesn’t roll out a complete, comprehensive collections system, it contains nine tips and techniques every self-storage manager can use to improve his collections and reduce stress.

1. Greet Potential Customers Professionally

Know how to answer the phone, or stand up and shake hands with visitors. Be welcoming. A great collections system begins by creating rapport with potential customers. People have to make decisions about who to pay, and you’re more likely to be on their list when you’ve taken the time to establish a relationship.

2. Get the Facts

Ensure the tenant-information sheet is complete. A lot of managers don’t complete these forms. Often, there are missing phone numbers, inadequate addresses, no extension for a work phone number, etc. Also make sure the information on the sheet is correctly entered into the computer. There are far too many instances where the “phone disconnected” notes could have been cleared up if someone had the good sense to ensure the number was correct in the first place.

3. Clearly Explain the Lease

Too many managers are shy about explaining what the lease says, particularly in reference to the late-fee structure and lien process. Customers must understand—and managers must ensure they understand—that the expectation is the customer will pay on time, and there are consequences if this doesn’t happen.

4. Never Waive Late Fees

If you want to clean up your past-due accounts, quit waiving late fees. If you’re the manager, own that policy: You don’t waive late fees. Don’t blame it ownership and say, “They won’t let me.” Professional managers take responsibility.

Remember, you have customers’ stuff; you have all the leverage. So enforce the lease, and do so consistently and fairly—no favorites, sexism, racism, ageism or other “isms.” Everyone pays late fees or no one does. The same goes with overlocking past-due units and cutting locks.

5. Follow-Up With Every New Rental

Send a thank-you card, make a thank-you phone call and send a thank-you e-mail to every new customer. First, this is just good customer service. Just as important, it’s a great way to make sure the customer gave you correct contact information. Don’t wait until he’s past due to find out the phone number, address or e-mail is incorrect.

6. Push Your Auto-Pay Program

How much of a collections issue would you have if most of your customers were on auto-pay? Quit asking new tenants if they want to sign up for it. Instead, make it part of the sales presentation. For example, you can say, “Our customers love the convenience of our auto-pay program. Do you want to use your Visa or MasterCard?” More auto-pay customers means fewer past-due customers.

7. Never Accept Partial Payments

Again, we have their stuff and we have all the leverage. Too many managers are asking, “How much can you pay today?” Instead, you should be telling the customer how much is owed and accepting nothing less. Once you start taking partial payments, it’s as if the customer gets on a gerbil wheel he can’t ever get off.

When a manager tells the customer what’s owed and sets the expectation that nothing else will do, more often than not, the customer has the entire amount. You wouldn’t accept a partial paycheck, so why accept only partial amounts of the rent due from customers?

8. Set Up and Document a System

Your collections system should indicate on which days calls are made and at what time, which customers are called on which days, etc. That system should be documented so anyone involved in the collections process knows what’s going on. Too many past-due customers fall through the cracks because there’s no system to ensure it doesn’t happen.

9. Follow Up on Broken Commitments

Of all the negligent acts committed by self-storage managers, this is the most common: They fail to call customers who lied about paying yesterday. It’s inexcusable that a manager would note on an account “Customer will be in on Friday,” and then fail to call the customer for several days or weeks when he doesn’t show up.

No manager would accept not being paid his salary on time, so why is it OK if customers don’t pay the business on time? By not making those follow-up calls immediately after the broken commitment, you’re letting tenants know you really don’t care if they pay. That’s not a good message to send.

The most professional and successful self-storage managers take their collections responsibility seriously. They have a system, implement policies fairly and consistently, and understand that without effective collections a facility will struggle. The best owners ensure their managers have the tools to succeed. Learn to improve your revenue and profit with effective collections procedures.

Bob Copper is the partner in charge at Self Storage 101, an industry consulting firm that assists facility owner/operators and managers in developing more effective and profitable operational systems. The company also aids in conducting performance reviews and providing the necessary tools to perform at higher levels in a competitive industry. To reach him, call 866.269.1311; e-mail [email protected]; visit www.selfstorage101.com.