Notice of Past-Due Rent

Cutting Down on Self-Storage Tenant Delinquencies

Not all self-storage customers will pay their rent in a timely fashion, but facility managers can cut down on delinquencies by offering tenant payment and reminder options during the initial rental paperwork.  

By Frankie Frank

Wouldn’t it be wonderful if all your self-storage tenants were conscientious and paid their rent every month—on time? Unfortunately, we know this isn’t realistic. However, there are ways to cut down the time it takes to collect rent and put the responsibility squarely on the customer, where it should be. One way to ensure payments go smoothly is to educate the customer about his options and offer him choices from the get-go.

Eye on the Ball

Once you’ve helped the customer find the perfect unit, it’s time for him to review and sign the rental paperwork. It’s important to explain just enough—but not too much—so he hears what’s most important.

There are operators who insist on giving renters all the negative news about fees, auctions, etc., at the very beginning of their presentation. But put yourself in the customer’s shoes. Can you imagine anything more unpleasant than hearing the storage company you just chose to rent from is going to sell your belongings if you don’t pay your rent? While this needs to be conveyed, hammering the point right out of the gate puts the brakes on the listening process. Instead of grasping what’s most important—i.e., paying the rent—the customer will keep hearing in the back of his mind that you’re going to sell his stuff.

Clear communication with tenants from the beginning will educate them about your expectations. When presenting the rental paperwork, it’s common sense to simply cover the key points. If you overload them with so many details that their head is spinning, they’ll tune you out.

It’s also important to consider the age of the person in front of you and adjust your presentation accordingly. Millennials, 40-somethings and senior citizens don’t live the same lifestyles. They aren’t going to do most things the same way, and that includes paying their bills. Offering a variety of payment and reminder options lets each tenant choose what works best for him, and can be the impetus to successfully collecting rent each month. Everyone on your team should be trained to deal directly with customers and concisely present each option.

Payment Options

Here’s a breakdown of payment options you can offer to customers:

  • Prepayment: This is a wonderful option for anyone planning to store long-term. Offering discounts for prepaying multiple months can be a great incentive. Just remember that any prepaid rent may need to be refunded if the tenant vacates prior to the end of the anticipated term.
  • ACH autopay: This option carries roughly 10 percent of the processing fees of using credit cards, so it makes sense to suggest it first. The Automated Clearing House (ACH) withdraws money directly from the tenant’s checking account each month on his renewal date.
  • Credit card autopay: As with ACH autopay, payments are charged to the card each month on the tenant’s renewal date. When a tenant signs up for either autopay option, collecting rent becomes a non-issue. Rent is paid each month, and customer simply forgets about it. That said, it’s important to keep the process running smoothly by paying attention to card expiration dates and reminding tenants accordingly.
  • Online payments: This is usually a point-and-click system that gives tenants the option to pay by credit card at any time. Typically, there’s no charge for this option, but it’s important to set time limitations if a tenant is in default.
  • Pay by phone: This option allows tenants to call during business hours and pay with a credit card. Some companies charge a convenience fee for this service because it takes time away from other tasks or customers. Informing and reminding tenants that they may pay online without incurring any fees can make them think twice about paying by phone.
  • Check or money order: With this method, tenants typically mail payments to the facility. Remind them to allow sufficient mailing time so payments get to you before their renewal date.
  • Cash: Cash payments should be made in person and not left in a drop box. This way money can be counted by a staff member and verified by the payee, and a receipt for payment can be issued. This leaves very little room for error. For auditing purposes, it can be helpful for customers to sign an extra copy of all-cash payments to be entered into their tenant file.

After you’ve shared your payment options, ask the tenant which he prefers. Though he isn’t tied to one option, asking for a preference will reinforce that he’s made a choice and is responsible for making his payments.

Reminder Options

Another way to reinforce timely payments is to offer reminders. Again, this allows tenants to make a choice and reinforces that it’s their responsibility to stay current. It also relieves some pressure off the manager or whoever is responsible for making collections calls. All options need to be prefaced with the understanding that fees will be imposed for late payments. Here are some options to offer:

  • No reminders: This is good for those who pay their rent on time and don’t wish to be bothered with additional communications from your facility.  
  • E-mail: This is a good option for most tenants and can include a link directly to your facility’s online payment page (if this is offered).
  • SMS or text: This is my preferred method, as again, the reminder can include a link that takes the customer right to payment area of your website.
  • Phone call: Some tenants still prefer this method, particularly if they’re older.
  • Paper invoice: Again, this option may be preferred by older tenants who are used to paying for bills by check.

Informal Formality

To help ease the payment and reminder process and make it clear to customers, consider adding an options form to your rental paperwork that you can keep in each tenant file. Give the customer a copy for his records. The form could look roughly like this:

Options Form

Rent renewal date: _____________________

Payment Options
(Please initial your preferred method.)
____ ACH monthly autopay (includes e-mailed invoice)
____ Credit card monthly autopay (includes e-mailed invoice)
____ Online credit card payment (no-fee option via our website)
____ Pay by phone (includes a $3 convenience fee and e-mailed invoice)
____ Check or money order
____ Cash (in person only)

Reminder Options
(Please initial your preferred method.)
_____ No reminder (unless past due)
_____ E-mail reminder
_____ SMS or text reminder
_____ Phone-call reminder
_____ Paper invoice reminder

We all prefer to make choices that work best for our lifestyles. Offering tenants payment and reminder options may take a little more time when completing the initial paperwork, but putting the responsibility on them can free up enormous amounts of time and energy each month when it comes to collections.

Debbi "Frankie" Frank has 12 years of experience working in all aspects of self-storage management and training. She’s owner of Working Smarter in Guffey, Colo., a consulting firm that helps storage owners, managers and staff set up, organize and become inspired to love what they do. For more information, call 760.458.9802; e-mail [email protected].

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