Payment Methods that Work for You and Your Tenants
By Shannon Charbonneau, Director of Client Relations, XPS Solutions
If you’re in the self-storage industry, you already know that getting paid for your spaces is a big part of the daily tasks on which you and your staff spend your time. From discussing payment options during the rental process, to communicating with tenants on balances that are due soon or past due, to actually taking the time to accept live payments in the facility or over the phone, these are the things that take time for your site staff that you would rather have them use to help new tenants move in, or keep your facility in tip-top shape to attract new tenants.
We all know that the best outcome of the rental process is for the tenant to immediately sign up for auto-pay at the time of rental. Some companies even agree to waive the first late fee for tenants who are on auto-pay in the event of a credit card change, or expiration date update that isn’t communicated to the facility on time. Why? Because, in theory, that type of change will only happen once per year, and savvy owners know that using this as an extra incentive to get people signed up on auto-pay is an almost sure way to make sure that tenant’s rent will be paid, in full and on time, for 11 out of every 12 months.
If all tenants would agree to auto-pay, we could stop the conversation right now. However, not everyone is comfortable with providing their credit card to keep “on file” with their storage facility. Others intend to pay cash monthly or prefer a certain measure of control over when a charge hits their credit card. For those tenants, it makes sense to offer additional ways to pay. Not only that, but with some software systems, you can actually turn the payment process itself into an additional revenue opportunity – above and beyond just the rent.
Here are just a few options – beginning with those that take no time for your staff up through the most time consuming:
- Automated telephone payments
You may also know this as an IVR (Interactive Voice Response), and for the most popular management platforms in the self-storage industry, setting up an automated payment system simply requires a one-time link to a system that handles this feature. This requires no day to day interaction from the facility owner or staff and is simply a portal for your tenants to make their payment directly in to your system. For the tenant, this is helpful because it means they can make their payment 24/7 and all they need to know is the phone number on the account and their credit card in their hand! In addition, automated payments that are handled by the tenant only make sure their information is kept secure. Automated payment systems may also be configured to add a convenience fee for this service. Some facilities prefer not to charge for this service as a business philosophy. But others choose to charge for convenience and require a fee that ranges anywhere from $1 to $10 that goes straight to your bottom line when the payment is made. Think of it this way. If you charge $1 to each tenant, and 75 tenants use this payment method, you just earned an additional $75 for the month. And you didn’t have to use any of your rentable inventory to earn it.
- Mobile application
The biggest benefit to your tenants of using a mobile application for their payment is that once they set up the app and link to their account on their phone, they’re only ever 2 clicks away from making their payment – with no special log in name or password required! Also, as your tenants move to a more mobile-device-centric lifestyle, putting a payment method right where it makes sense for them helps you get your money! Not to mention that a mobile app is a wealth of other information for your tenant at their fingertips. Which means that not only do you get your rental payment, but you’re able to communicate additional details to the tenant at the same time!
- Online
Online payments are an excellent option as well. Most modern websites are optimized for mobile use, which helps your tenants get to the payment option on your website even if they aren’t at a computer. And as long as they have their user name and password created and saved, this is another easy and effective way to help get your money without taking time out of your staff’s day.
- Telephone payments to a live person
In some cases, your tenant may simply want to call your facility during office hours and pay over the phone. This is also an effective way to collect your rental payments. However, there are drawbacks to this method. Depending on just how many of your tenants are utilizing one of the first three options above as well as auto-pay, this option could represent a fairly high number of telephone conversations with your staff. If you conservatively estimate that each payment call will take your team three to five minutes, you can see how much time can be taken by simple payment calls if you have even 100 tenants who wish to pay by phone with you in a relatively few number of days. For those of you who enjoy the math part – this is assuming about 400 minutes of talk time with your staff over the course of generally only a few days. That’s seven hours, or nearly a full work day, of just talk time! Do you have a large facility? Then you can easily double or triple that time estimate. Add to that the pressure of training your staff on PCI Compliance requirements and the processes that your team must follow when accepting a phone payment in order to safeguard your tenant’s credit card information (and by extension, protect your business), this time commitment is even higher. Oh – and about that 7 hours? It just happens to occur during what is already your busiest time for move-ins and vacates.
- In person at the facility
For properties that employ full-time onsite staff, this is a valid option as well. One thing to consider, however, is that while telephone payments take three to five minutes, the average “drop by” payment can take ten minutes or more. Several things account for that increase, such as additional tenants already in the office, new renters in the office at the same time filling out their paperwork, and, last-but-not-least, the “chatting”. You know this tenant. They may drop by to visit their belongings and make their payment, and they like to talk to your staff. How long do they stay? Well, that can truly only be answered by your onsite staff. But this can range anywhere from the same few minutes they would have spent on the phone, to a whole lot longer as you offer your tenant a complementary bottle of water or cup of coffee and chat a while with the intention of building a relationship with your customers. Is this effective at collecting money? Yes. Is it the most effective use of time for your team at the facility? Probably not.
Some operators are even using payment fees to encourage the type of payment behavior they want to see. For instance, they may charge a $1 fee on an automated phone payment, a $5 fee for a live phone payment, and keep online or mobile app payments free as a method of guiding tenants to those options, or generating revenue for the payments made in the way that makes the most sense to the tenant.
Each of the above is a valid option for helping you collect your rental payments. Hopefully on time! It’s up to facility owners and staff to determine which options make the most sense for your business and where your time is best spent. While the last two can be done by you and your team, the first three require that you find a vendor partner who can help. There are a number of ways that you can research this. One of the easiest and most effective ways to do so is to simply ask your Software Management System provider for a list of who they work with that can provide you with these services. In some cases, that same SMS can handle the online payment portion for you! If they are integrated with a vendor partner who can provide the other services, they’ll even be able to provide you with contact information to get what you need!