12 Jul
First of the Month Billing vs. Anniversary Billing
Every storage facility owner and operator runs their business differently, which is why 6Storage is proud to offer billing options for any time frame! With our all in one self storage management software, you can bill your clients as frequently as daily and as infrequently as yearly.
Two of the most common ways storage owners choose to bill their customers are First of the Month Billing and Anniversary Billing. This blog will explore the ins and outs and pros and cons of each method.
First of the Month Billing
When a storage facility owner chooses the First of the Month Billing option, their tenants’ rent is due on the 1st of the month. The day they move in is prorated, and the tenant only pays for the days they utilized the storage facility that month. For example, if someone moves in on the 8th, the amount is prorated for the remaining 22 days. If rent is $100, they would pay about $73 dollars at move in, which would cover their rent through the end of the month, then they would be due again for the full $100 on the first of the next month.
Some owners find that first of the month billing can be easier to manage in that all of the operational activities are happening all at the same time. If there is a three day window before overlocking or locking out of the gate, then that happens for anyone three days past due. For remote management, this allows the operator to not have to be at the facility every single day overlocking tenants because it all happens on the same day of the month. They can go to the facility on the third day of the month and overlock everyone who is three days past due. This also means the income comes in only one time a month.
Anniversary Billing
Some people like to have a trickle flow of income all month long, which is why they may choose anniversary billing. With anniversary billing, the customer is due on the same day as the move in date each month. If a tenant moves in on the 8th of the month, their rent will be due 8th of every month.
This eliminates proration during move in, and in some instances, operators may choose to eliminate proration altogether. Some operators choose to do proration at move-out, which is applicable for both anniversary and first of the month billing. This is when the operator chooses to refund any unused days that they’ve paid for. For example a tenant is due and paid on the 1st of the month, but wants to move out on the 15th of the month, the operator can choose if they want to refund the remaining 15 days. This adds an additional step in the move out process and adds additional transactions to balance in accounting.
The Choice is Yours
Whether tenants are billed using First of the Month Billing or Anniversary Billing, it is entirely up to the owner on how they want to operate. No matter which method an owner/operator chooses, it should be clearly defined in the lease agreement. Learn how 6Storage can help you seamlessly manage your self storage business and schedule your live demo today.
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