By Colleen Wood
Resolving delinquent accounts is an integral part of every self-storage manager’s job, but it’s often the least favorite part. Sometimes, it’s more difficult than it needs to be, and managers make work for themselves than necessary.
In-house collections procedures are often tailored to reflect the perspective of the owner, manager or management company. The process should be compiled into the training modules for new employees, but as you might imagine, there’s more than one school of thought on the best way to approach delinquent accounts. Let’s explore the options.
One philosophy—one might call it “the old-school approach”—espouses aggressive collections tactics. They typically look something like this:
- Call/mail/e-mail the customer to remind him his payment is due.
- Call/mail/e-mail the customer again to remind him a late fee is pending.
- Notify the customer by phone/letter/e-mail that his rent is now past-due and a late fee has been assessed.
- Call/mail/e-mail the customer once or twice per week thereafter, until he brings the account current or his unit is processed for auction.
- Contact the customer by all available phone numbers and addresses to advise that his unit is going to be processed for auction, and when.
- Once the customer is in lien status, mail or e-mail the applicable legal notices (depending upon state law requirements).
- Continue to call/mail/e-mail the customer for payment until auction day.
Most of us who have been in the storage industry for more than a few years recognize this format as one of the familiar procedures for collecting delinquent funds. It became one of the industry standards because it worked. So, what’s wrong with that? Read on.
Because it works, the above technique is frequently employed by collections agencies and short-term money lenders. The customer may even borrow funds from family and friends just to make you go away and leave him alone! So you win, right? You’ve got the money. That was the objective of the exercise, correct? Not so fast.
While the tenant’s payment under duress “cures’ your delinquency problem this month, the tactic comes with side effects that aren’t necessarily a win for you. Let’s take a closer look.
Side Effect 1: Bill Monitor
One side effect is the collections system above sets you up as the “bill monitor” for your customer. Because you reminded him every time his bill was due, the customer didn’t have to remember when to pay it. You remembered for him. Every time a late fee was approaching, you reminded him there was an additional cost pending. So your customer never suffered any consequences for not paying his bill on time.
Wait a minute; that sounds very familiar. Isn’t “consequences of actions” one of the life lessons we teach our teenage children? Many parents of successful adults report they taught their teens to be self-sufficient by holding them accountable for their actions. They didn’t enable them to become financially irresponsible or impose their responsibilities on others. Hold that thought for a moment.
There are self-storage managers reading this article who are thinking, “It’s not an imposition; it’s part of my job to remind my customers of their payment. We offer exceptional customer service. Going the extra mile is a regular part of our management practices here. Customers are very busy, and they often forget. My tenants appreciate my reminders; it saves them the expense of a late fee.”