Debt collection is often the most unpleasant part of any business. Aside from managing cash flow, establishing a process and making ends meet, you’re faced with other unforeseeable outside challenges. Some tenants pay on time, some pay late, and some simply don’t pay at all. With the build up of varying circumstances, it can be difficult to determine the best approach for your business.
Zoom into the bigger picture and ask yourself; is my collections process effective? Is it driving revenue in an efficient manner? If you’re hesitant, it may be time to refresh your procedure. With our guidance and resources, we’re here to walk you through best practices in the industry to improve your collection process.
1. Standardize your process. Manual or automated, keeping consistency in your routine is essential. After all, collections aren’t a one-off event. Through standardization, you’ll form better time management and provide a better customer experience, all while keeping your staff productive.
If you’re not already using automation in your self storage collections strategy, a surefire way to strengthen your process is by assessing time spent on collection activities. Use automation through various channels like text, email and phone as a supplemental tool for on-site staff. By eliminating monotonous tasks like invoicing and rent reminders, they’re able to spend less time dialing for dollars and more time focusing on closing rentals.
Now more than ever, customizable messaging should also be a staple feature within your collection process. In the second quarter of 2020 we saw a drop in collection events, including payment-reminder texts, calls and emails, in an effort by operators to lead with empathy through the onset of the COVID. Eventually, the number of events bounced back and many were able to easily adjust their tone and messaging. Messages like “Pay now: Upcoming Rent Payment Due” were softened to “Friendly Reminder: Upcoming Payment.” Especially during our current environment it’s important to stay flexible and transparent to provide the best possible customer service.
Regardless of your process, you should also have visibility into your staff’s follow-up schedule. Relying on traditional methods like the honor system or pen-and-paper tracking just aren’t dependable enough to ensure tenants are being contacted. With a mix of technology, sending and tracking collection notices are easy and, most importantly, guaranteed.
2. Encourage auto-pay enrollment. Take a look at Netflix or Amazon, or maybe even your gym. The convenience of auto-pay is transforming the way people pay bills, and eliminating the hassle of paying on time. Despite the uncertainty of the economy we found a 48% increase in auto-pay enrollment year-over-year for July. The significance? A large CallPotential operator found that the average length of stay for auto-pay enrollees is 4-6 months longer than other tenants. When it comes to loyalty and retention, auto pay is a customer gold mine.
In addition to your own financial benefits, tenants are freed from the burden of recurring payments. In the age of virtual tech, convenience is the name of the game and automation is helping improve the overall customer experience. You can even start an incentive campaign to boost enrollment numbers. Offering freebies like waived late fees or 10% off of their next monthly payment are a good way to convince your tenants of auto pay’s mutual benefits.
3. Empower tenants with multiple payment options. Like mentioned above, convenience is key. If you can pay for a cup of coffee with your phone, you should be able to pay a monthly bill the same way. Tenants are actively searching for more convenient ways to pay. In fact, we found that 88% of payments were self-made year-over-year. As we, consumers ourselves, continue to adopt new payment methods into our daily lives, we begin to expect them elsewhere and replace our traditional methods. Through different payment channels, whether it’s mobile, email, or pay-by-phone IVR, your convenience to your customers is the most essential part of your collection process.
Of course there will still be a mix of customers who are reliant on and more responsive to traditional payment methods. Their preferences are guided by their own level of convenience. This is why offering a holistic payment approach through omni-channel communication is usually the best option. As opposed to multi-channel, omni-channel uses every medium to connect with tenants and get results. It’s simple - more ways to pay, more ways to get paid.
Through our data, research, and expertise, we hope to have uncovered a few ways to rethink and improve your collection process. Staying competitive through new tools and technology is proving to pay off, especially as we grapple with the ever-changing circumstances of our current environment. We can imagine the demand for more self-pay options will also continue to grow in our transition to a more tech-friendly, virtual environment. Through a standardized process, valuable tools, and additional payment options, your collections process can organize your ops and keep you competitive.