Embezzlement in Self-Storage: Danger Signs for Facility Owners and Tips for Prevention

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Employees who fail to overlock. Embezzlers commonly do not use the company's overlocking procedures for delinquent tenants. Often it’s because the customer is not really delinquent or the employee doesn’t want complaints or problems from tenants who may alert other employees or the owner.

The use of generic, manual receipt books. It’s too easy for employees to give those receipts and not put the payment in the computer or credit the customer's account. Watch for missing carbon copies in manual receipt books or more than one receipt book in the office. Do not allow employees to use the receipt book for every customer transaction before entering the payment in the computer. Ideally, avoid generic receipt books, though you may need them if your computer or the Internet goes down.

Use of both a computer and manual bookkeeping system. This may sound strange, but there are storage properties still using the aforementioned accounting systems at the same time. This is a huge red flag for embezzlement. Having two accounting systems makes it too easy to steal.

An Atmosphere of Deterrence

Just the fact that self-storage properties have little supervision leaves owners vulnerable to employee theft. Another problem is owners often give employees administrative rights in the computer, enabling them to manipulate data including credits, concessions, deletions, etc. A system of checks and balances should be in place to know when you have someone embezzling. Here are several suggestions:

  • Have a person from the home office complete a unit inventory of every storage space.
  • Inventory the merchandise for sale in the office.
  • Check deposits daily for accuracy and consistency in depositing.
  • Require employees to send a unit inventory to the home office on a weekly basis.
  • Require monthly paperwork from the manager, including the move-in and move-out ledgers accounting for all rental agreements and credit and adjustment forms

Create a policies and procedures manual for the property and give a copy to every employee. When you visit, don't hesitate to discuss procedures and how managers should be operating the store. This type of manual will also help prevent legal liability.

Every day, embezzlers create more inventive ways to steal from employers. However, if you implement internal controls and monitor software transactions, you should be able to quickly find anyone who is stealing from your self-storage facility.

Carol Mixon Krendl, an industry expert and owner of SkilCheck Services, has been involved with the self-storage industry since 1984. She’s written many articles on a variety of self-storage topics, including a quarterly newsletter on self-storage sales and customer service. Lodi, Calif.-based SkilCheck provides customized training seminars, educational products and mystery shopping. For more information, call 800.374.7545; visit www.skilcheck.com .

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