Final Demand Collections Letter

Creating the Right Mindset for Self-Storage Collections: Staff Training and Emplowerment

Debt collection is one area in which there’s always room for improvement in the self-storage business. Learn how to train and empower facility managers for more successful debt recovery.

By Cheli Rosa

A smart self-storage owner wants to squeeze every dollar he can from his business. Is there a point at which profits are maxed out? Maybe, but probably unlikely.

Even if your occupancy rates are up and you’re happy with your facility’s performance, does that mean there’s nothing left to do but watch the money add up? No, it means it’s time to start looking at your revenue and figure out what money you’re leaving on the table. As the saying goes, “There’s always room for improvement.”

Debt collection is one area in which there’s always room to improve in the self-storage business. Collections aren’t fun. I’d be surprised to meet anybody who liked to call people and tell them they owe money. Even worse is having to tell them that if they don’t pay you, you’ll sell their prized possessions.

Fortunately, you can put steps in place to avoid having to make those dreaded calls. The key is to get yourself and everyone who works at your facility into the right mindset to collect debt. It’s up to the owner to hire the right managers, train them on proper collections procedures, and empower them to feel like it’s their money they need to collect.

Starting on the Right Foot

Facility managers handle many tasks: accounting, marketing, maintenance, customer service and collections. This can quickly become overwhelming, and collections can be especially intimidating. There’s a reason collections companies are always hiring—it’s a tough, thankless job that has the potential to really affect one’s psyche.

From the time they’re hired, managers need to understand that everything they do, starting on day one, will impact the rest of their job and can make it easier—or more difficult. For example, those who work hard to keep the facility clean from the beginning will likely take steps to ensure it stays that way. The same can be said for collections. If you establish a firm payment policy on day one and the manager takes immediate action whenever a tenant strays, he’ll be able to keep collections under control.

To get in the right mindset, managers must understand that customer service is an important part of their job. Creating a good rapport with tenants will allow them to more easily interact with them when they need to address a sensitive issue, such as late payments. They should stand up when a customer enters the office, put down the phone, come out from behind the counter, shake his hand and listen when he talks. By making customers feel important, managers also make them feel a responsibility to the business to pay their bill.

The practice of ensuring timely payments starts with the lease presentation. The manager shouldn’t race through it. Rather, he should take the time to go through the document with each tenant, asking the customer to initial next to important sections, including those that spell out due dates and late fees. You can include addendums if further clarification is necessary.

Your lease is a legally binding document. It should cover all of your policies and procedures and be very clearly explained to each renter. Explaining the lease and giving customers the knowledge they need to be a great tenant is the basis of good customer service and can help reduce the possibility of late payments.

Knowing What to Do and When

Once managers have the right mindset about how to treat customers, they need to know how to handle collections. Most people don’t know proper collection procedures. It’s not a skill they go into the world thinking they’ll need. Managers must be trained, and your business must have procedures in place. The biggest mistake an owner can make is thinking his manager will be responsible for implementing these systems. How will an employee know what’s expected of him if you don’t tell him?

First, make sure managers know collections are a priority. Managers often make these calls when they have nothing else to do. This isn’t the appropriate way to address the task. Rather, these efforts should be part of the everyday to-do list. Have a specific plan in place; for example, managers can call late-payers on Monday morning, e-mail those same people the next day, call them Tuesday afternoon, and then text anyone with whom they haven’t connected on Wednesday. Determine a system that works for your business and stick to it.

Establish monthly goals regarding delinquency percentages. Do you allow managers to waive late fees? If you start forgiving fees, people will expect to get off the hook. What steps do you want a manager to take if he can’t get a tenant to pay? Should he try to get a settlement and force the tenant to vacate? If so, what percentage of owed rent does he need to obtain? Put these policies in writing and make them a part of the facility operations manual. You can also display them on a white board next in the office. Make sure everyone knows the rules and understands that collections are as important as the daily walk-through.

Teach managers they shouldn’t take anything personally when trying to recover debt. They should see collections as simply another part of day-to-day business. While making calls, managers should be firm but friendly. They need to approach it as if it’s part of good customer service. They’re letting the tenant know he’s late because they don’t want him to get charged a late fee and certainly don’t want to see him lose his possessions at lien sale. They’re trying to help customers, not calling to harass or berate them.

Finally, make sure your managers aren’t violating the Fair Debt Collections Act. For example, they can’t tell anyone other than the tenant how much money is owed or why. There are also certain times of the day when collection calls are prohibited. Many states have policies about this as well. It’s the owner’s responsibility to relay this information to his managers so they don’t violate any laws.

Sharing Empowerment

The last hurdle is to get the manager to operate as if it’s his own money he’s trying to collect. Managers often waive late fees because they think, “What do I care? It’s not my money.” They don’t always feel a sense of urgency when it comes to collections because it doesn’t give them any measurable benefit. They don’t get to keep the cash.

However, there are ways to combat this lack of motivation. If you make it clear that collections are as important as all other elements of their job, managers will know they need to make them a priority to succeed and stay employed. Prosperous collections might lead to an increase in pay or other incentives. At that point, it does become their money they’re trying to collect. Many self-storage lawsuits are the result of manager error. If owners can empower their staff to feel as if it’s their business and money at stake, they’ll be able to better safeguard themselves from liability.

Self-storage is big business, and the operation rests largely in the hands of one or two people. Success begins and ends with the facility managers. A responsible owner will take the performance and well-being of those people seriously.

Collections are part of the equation. Collecting past-due can’t be an afterthought that gets addressed once per month. If managers operate that way, facility owners are losing money, and they shouldn’t accept this. Creating the right mindset is the key to success in recovering debt.

Cheli Rosa is director of marketing for StorageStuff.Bid, which provides online storage-auction services. She’s a former high school teacher turned storage professional turned auctioneer. She’s worked in all areas of self-storage. Her constant desire for additional knowledge led her to immerse herself in the lien-foreclosure process. For more information, call 877.758.4243; visit www.storagestuff.bid.

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