Once an advertisement goes up on your sign, you must then collect rent every month, every year, or whatever interval in your lease. And often you have to do some degree of action steps to get this accomplished. In this Billboard Mastery podcast we’re going to review the right – and wrong – methods to collect your sign rent.
Episode 31: The Right – And Wrong – Way To Collect Sign Rent Transcript
I was reading a book recently I bought at an estate sale. It was about someone who had a business traveling around America selling things back in the 1800s. And throughout the book, the big focus of this person, a big part of everyday was spent on collecting money from the things he sold. This is Frank Rolfe for the Billboard Mastery Podcast and things haven't changed much all the way back from the 1800s to current. When you sell something - a billboard - to an advertiser, it's an integral to the business relationship that you collect your rent. There's no purpose in selling, if you don't have any collecting. But there is a fact a right and wrong way to collect your billboard rent. And if you do it the right way, you can do very well in your career. And if you do it the wrong way, your career may be relatively short lived.
So what is the right way in the wrong way? Well, here's what's at issue. When you have an advertiser, and you've got a rental agreement, they owe you money, it's important that you do everything possible to get paid without losing the advertiser. A lot of businesses, particularly small businesses, from time to time, and maybe some times every day, are cash strapped. They don't really have the money to pay all their bills so they have to prioritize those bills. So what's the priority that they pay? Well, first, they pay things they think that are actually important to them and helping them. If it's a restaurant, they got to pay for the food. If they don't buy the raw ingredients to make the meals, they can't sell anything, and the business goes bankrupt. But then they have other bills that may come in, maybe they're a member of the Restaurant Association, that's probably not a very high priority item, right? And then of course, comes your billboard rent.
So the first way to make sure you get paid every month like clockwork is to have a successful billboard, one that actually draws customers in and they know it. So how do you make that happen? Only try and rent billboards to people that can actually benefit from them. That would be rule number one. Try and find the most logical advertiser for that sign. Somebody who can say maybe "Exit Now," "Next Exit," but somebody who will find it a worthy addition, a worthy investment where they're putting money out every month on that billboard, but they're getting it back in the form of sales and profits.
Number two, once you find that business, make sure that the actual advertisement is a successful and smart one. It's part of your job as the billboard owner to push back against people who want to put up advertising copy that's not any good. Because if it isn't any good, they won't sell anything, and therefore they don't want to pay the rent. So a lot of times you yourself create the problem and getting paid because you rented a sign to somebody who had no business being on the sign. And or you made up an advertising copy that's not drawing anyone in the door.
Now next, invoice your customer. I've tested at all ways. You cannot depend on them to remember to pay you every month. You need to send them an invoice. And if possible, put a return envelope in there. That's what all the professionals do, right? How many bills do you get that had the return envelope inside of it? Well, from all the big companies I know it does. And give them plenty of advance notice. If your rent is due on the first send the invoice on at least the 15th because businesses don't just pay their bills as soon as they come in the door. They gather them together and then they pay them.
Now what if you've done all the right steps? What if you've chosen the right advertiser, great copy and you invoice them, and the check still doesn't come in? Well, no reason to get mad at this point. Give them a friendly reminder. Call them up and say, "Just wanted to touch base we hadn't got your check in yet. Just wanted to make sure everything was okay and see if we were mailing it in." Nothing adversarial, nothing negative nothing judgmental. Just say, "Hey, you know I appreciate you as a customer and want to just follow up and see in fact if you were going to mail in a check." That's not bad. They don't get mad at that kind of a call. Many of them will say, "You know what, I do need to pay that but I'm not paying the bills till Friday because I went out of town." Or some may say, "You know what, this has been a really bad month at the restaurant but I'm definitely going to pay you but I can't pay you for another two weeks." At least you put in motion the fact you probably will get paid. Don't be afraid to make that call. Don't be afraid to bug the advertiser. For all you know the invoice never arrived in the mail. For all you know, they sent the check and they and they mailed to the wrong address. You have to get out of your comfort zone though and push them a little bit on that.
And if the check still doesn't come in when they promised you go ahead and call them again. Not in an adversarial mean way, just say, "Hey, I just wanted to check, I didn't get the check like you said you would mailed on Friday. Did you have a chance to mail it?" And again, see what they say, and they know what's going on. Yeah, they didn't do your check. But since you called again, you reminded them, they kind of sort of have to really do it. Now, if it's really late in the month, you can even say, "You know what I'm going to be out in your neighborhood, I thought I would just stop by and pick up the check if that's okay." They know what you're doing. But they feel the same way, they know that you need it to pay your bills. So gosh, darn it, they're going to jump you ahead of the list of the other folks they haven't paid yet and go ahead and pay that bill and send it in. So the key is make a successful sign, a successful ad, send them an invoice. And don't be afraid to push them a little in a friendly manner to get the money. And if you have an advertiser on your sign for years and years, there's going to be at least one year every couple where they're starting to have a little bit of financial squeeze. And you may have to fall into this rut, and then suddenly, it never happens again. Or, as the advertisers business grows, no longer are they ever cash strapped again, you never have a problem.
Now, what are some wrong ways to collect the money? Well, we've already gone over the fact if you pick an advertiser that the sign won't benefit or if you do a bad ad, they won't want to pay you because they know that they're basically losing money every time they do. But also, you can be doing something very bad if you take no action. So taking no action is terrible. If you don't call to remind them, then you won't get paid. And that didn't work for you. But also don't go at them in a really confrontational, negative, judgmental way. Don't call them and say, "Hey, where's my sign rent? You had an obligation when you signed that lease to pay that rent." That won't get you paid. Now they don't like you. Now they're not going to renew. Renewal is essential in billboards, and you've just blown it. So don't treat them poorly. Remember, the golden rule treat people like you'd like to be treated. Use a soft approach, you catch more flies with sugar than you do honey, right? So go ahead and don't ever approach them in that kind of a fashion.
But here's the deal, if they don't pay you, no matter how nice you are, then you do have to get tough. Because at that point in the movie, if you don't do something radical, you aren't going to get paid. And the problem is, you're already out money in that case. You're out the money in making their ad, installing their ad, and worst of all, you're at the money and opportunity cost because the whole time you've had them on the sign you missed out on having somebody else up there. So if they just won't pay you at some point, you're going to have to say, "Look, I've got to get paid, I've got to pay my bills, what's the plan?" And if despite all those pleadings they still don't pay you well, then go ahead and terminate the lease so you can get somebody else up on the sign. Give them all the notice required in your state to do so, and then file a small claims court action on them.
I hate doing that, because obviously, it's embarrassing to them. It's no fun for you to do it. And certainly there won't be any repeat. That person will never be on your sign again. But at the same time, don't just write it off without the effort. There are people out there with billboards who they never really pushed at the end to get paid. They would never think about filing suit. So they wouldn't even take the effort to go ahead and terminate the lease for nonpayment to get another advertiser. But that's not right, either. You see that advertisers never going to be on your site again ever so what are you trying to accomplish?
The bottom line is be as nice as you humanly can and barring that if you still don't get paid, I guess be about as mean as you possibly can. And know when to be nice and know when to be mean. This is Frank Rolfe with the Billboard Mastery Podcast, talking about collecting rent, an essential part of life. Hope you enjoyed this. Talk to you again soon.