Collecting overdue funds can stir many emotional reactions, both for the company owed and the customer owing it. On the storage facility side, there’s often indignation: “I provided a service and they’re hanging me out to dry!” On the customer side, there can be queasiness over the fact that money has run scarce and they’re unable to stay current, or anger for what is perceived as less-than-professional service. Instead of proactively trying to work something out, many delinquent tenants hide their heads in the sand.
Emotional reactions don’t help resolve issues on either side. So, what can a self-storage operator do to generate more resolution and less hand-wringing?
Empower the customer. Attempt first to communicate in a pleasant manner, and gently try to understand why payments are overdue. Based on what you find, both parties can often find common ground. Even if it requires patience to get paid, ask yourself if it’s better to send it to collections or the auction block. Also consider the value of salvaging a customer.
Empower yourself. While attempting to empower customers, take care of yourself at the same time. One tip is to attempt to acquire a social security number with every rental application, noted Mike Balla of Escallate, a debt recovery and customer communication company. In the self-storage industry, he maintained that many owners limit options by not asking for a social security number, which is “gold for credit reporting,” and thereby provides an additional tool that may prompt some delinquent customers to pay.
Empower the process. Balla’s company offers a pre-collection program featuring low-cost letters and phone calls that ask the customer to deal directly with the self-storage owner. For those who want to pay, but are limited by financial or other challenges, this semi-casual approach may feel more welcoming and patient. It’s also positive for the self-storage owner, as 100% of funds collected at this early stage stay in their pockets.
There can be many reasons for non-payment. Seek first to understand. In some cases, income has plummeted due to a lost job or other development that necessitates putting what Balla called “ancillary” bills like storage rent on the back burner. In other cases, however, “There are people who think they don’t need to pay. There are a lot of people who don’t care anymore. Other people wait as long as they can,” Balla explained.
Ultimately, take it on a case by case basis. But if you want to avoid an auction or pricey collection, focus on taking negative emotions out of the equation to stay patient and compassionate for each tenant.