Anniversary billing charges each tenant on the day of the month they moved in. First-of-month billing charges every tenant on the 1st and prorates the first partial month. For a small facility, first-of-month is usually simpler to run and reconcile, and anniversary is smoother for cash flow and workload, so pick the one you will apply the same way every time.
Your lease must state the due date, how the first month is calculated and what happens on short months. Review that wording with your attorney.
The two cycles side by side
| Anniversary billing | First-of-month billing | |
|---|---|---|
| Due date | Day of move-in each month | The 1st for everyone |
| First payment | One full month, no proration | Prorated stub, then full month on the 1st |
| Cash arrival | Spread through the month | Bunched on the 1st |
| Late tenants | Spread through the month | Everyone late on the same day |
| Bookkeeping | Many due dates to track | One due date, simple |
| Rent increases | Different dates per tenant | One date for all |
| Short-month problem | Move-ins on the 29th to 31st | None |
| Proration needed | Rarely | Every mid-month move-in |
See the glossary entries for anniversary billing and first-of-month billing.
Anniversary billing in detail
A tenant who moves in on January 18 pays for January 18 to February 17, and is next billed on February 18.
Strengths
- No proration math at move-in. The tenant pays one clean month.
- Late payments and calls arrive on different days, so you can handle them one at a time.
- Tenants get a full month of use for the first payment, which is easy to explain.
- Cash arrives all month, which can ease your own bills.
Weaknesses
- Many due dates to watch if you do it by hand.
- You must write a rule for tenants who move in on the 29th, 30th or 31st.
- Rent increases and lien dates are different for each tenant.
- Reports by calendar month take more care because of the rolling dates.
The short-month rule
Say a tenant moves in on January 31. February has 28 days. Choose one of these and put it in the lease:
- Bill on the last day of any month that has fewer days (Feb 28, then Mar 31).
- Cap all anniversary days at the 28th.
Option 1 is the most common because the tenant keeps their move-in day when the month allows. Whichever you choose, apply it the same way every time.
First-of-month billing in detail
Every tenant is due on the 1st. A tenant who moves in mid-month pays a prorated partial month plus, in many setups, the next full month.
Strengths
- One due date means one reminder run, one late fee date and one deposit day.
- Easy to reconcile with your bank and books. See bookkeeping for self storage.
- One date for rent increases and monthly reports.
- Easy to explain and to teach a new helper.
Weaknesses
- Proration at every mid-month move-in, which is a place for mistakes.
- Everyone is late on the same day, so your calls come in a burst on the 2nd to 5th.
- Rent is bunched in the first days of the month.
- Some tenants complain about paying a part-month and then full rent right away.
Proration math, step by step
Prorating means charging for part of a month. Divide the monthly rent by the days in that month, then multiply by the days of use.
Worked example (illustrative)
Say rent is $95 and a tenant moves in January 18. January has 31 days. The tenant uses January 18 through January 31, which is 31 - 18 + 1 = 14 days.
- Daily rate: $95 / 31 = $3.0645 (rounded)
- Prorated charge: $3.0645 x 14 = $42.90
Under first-of-month billing, the tenant pays $42.90 for the rest of January, then $95 on February 1. Under anniversary billing, the tenant pays $95 on January 18 and is next billed February 18. Same tenant, same rent, different cash timing.
Use the proration calculator to check your numbers. Learn the term in the proration entry.
Decide in your policy whether to use actual days in the month (28 to 31) or a flat 30-day month. Actual days is fairer and the usual choice; a flat 30 is simpler. Pick one.
Cash flow: what actually changes
Say you have 120 units at $95. You bill $11,400 a month.
- First-of-month: all $11,400 is due on the 1st. If 85 percent pay by the 5th, that is 0.85 x $11,400 = $9,690 in the first five days, and the rest arrives later.
- Anniversary: about 1/30th of the $11,400 is due each day, roughly $380 a day on average ($11,400 / 30 = $380).
The total is the same. The timing differs. If you pay a mortgage or insurance on the 1st, first-of-month matches. If you struggle with cash gaps, anniversary may feel easier. The 85 percent figure here is made up to show the math, not a benchmark.
Autopay and software
Autopay makes either cycle easy, because the software charges the card or bank account on the due date. Autopay and payments in Stitch use Stripe, with a 0.3% platform fee on rent processed (see pricing). If you do not use software, the first-of-month cycle is much easier to run by hand.
How to choose
Answer these:
- Do you track everything by hand? Choose first-of-month.
- Do you have staff or software that can handle many due dates? Anniversary is fine.
- Is your own cash tight at the start of the month? Anniversary spreads it.
- Do many tenants move in mid-month? Anniversary avoids lots of proration.
- Do you want one big rent increase date? First-of-month is simpler. See how to raise rent on existing tenants.
What to write in your lease
- The rent amount and due date (or "the same day each month as the move-in date").
- How the first month is calculated.
- The rule for short months (anniversary only).
- The grace period, late fee and day it starts. See how to set late fees.
- What happens at move-out: whether unused days are refunded. Many leases say no.
See writing a good self storage lease for the whole document. This page is general information, not legal advice. Have your attorney review your lease.
Switching cycles later
Moving existing tenants from one cycle to another is possible, but it creates a part-month. Tell tenants in writing well ahead, explain whether they pay a short or long month once, and avoid doing it during a rent increase. If your tenants are on month-to-month terms, check your lease and state law about notice for changes.
Common mistakes
- Mixing both cycles with no rule, so nobody knows the due date.
- Forgetting to set a short-month rule.
- Charging a full month and a stub on the same move-in without saying so.
- Prorating by hand and getting different numbers each time.
- Changing a tenant's date as a favor, which makes your records hard to read.
What your rent increases and reports will look like
With first-of-month billing, a rent increase takes effect on one date for everyone, and a monthly report matches the calendar. With anniversary billing, each tenant's increase takes effect on their own date, and your monthly report mixes tenants at different points in their cycle. Neither is wrong, but your reports and your letters are easier to build when the dates are the same. See the rent increase letter template.
A quick decision table
| If this describes you | Lean toward |
|---|---|
| You do your books by hand once a month | First-of-month |
| You use software that bills automatically | Either |
| You hate chasing everyone at once | Anniversary |
| You get many mid-month move-ins | Anniversary |
| You want the simplest lease wording | First-of-month |
| You want rent increases on one date | First-of-month |
Setting it up in software
Whichever you pick, the setup is the same in any product: choose the billing cycle, set the grace period and late fee, set how a first partial month is handled, and test with a dummy tenant before you go live. In Stitch, rent is charged through autopay on the due date and late fees follow your schedule. Check the result on one move-in, one mid-month move-in and one move-out before you rely on it.