Inside Self-Storage

DEC 2018

Inside Self-Storage (ISS) is an information source for industry owners, managers, developers and investors covering news, trends, facility operation, finance, real estate, construction, development, marketing, technology, insurance and legality.

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catches my attention. It's worth your time to learn how to read the exceptions report. Finally, look at your price list and verify that all units of the same size and type are the same price. There shouldn't be any reason that all 10-by-10s are $100 but one is $30. If the tenant is paying $30, let his rate reflect that variance. If your staff is editing unit rates to reflect tenant rates, your economic occupancy and gross potential numbers are incorrect. Plus, the rent roll won't reflect the variance. It's vital to have units properly priced. Other Areas Once you feel comfortable with the information in your reports, review other areas of the business, such as: Payroll. Is your staff on site when they're clocking in and out? This data can be verified with gate-code login and cameras. Also, looking at the log-on history in your software will show when employees are logging in and which computer they're using. Inventory. This area is at huge risk for theft. Counting inventory on a regular basis is crucial to controlling expenses and closing opportunity. Check to ensure your retail product inventory matches what's in the management system. Truck rentals. Most truck-rental companies have a close-day report that shows the amount of cash accepted by your staff. Your accountant should receive this report at the end of the month and reconcile the total to the books to ensure all the cash reported was deposited. Prepaid cards. If you offer prepaid gas or gift cards in exchange for referrals, there should be controls in place. I did an audit for a company that offered prepaid gas cards. The cards' serial numbers were logged into the system, but the staff worked around these controls by using only part of the card value. The cards were worth $50, and they used $30 for gas for their personal vehicles. The business didn't find out until a customer called and complained. Staff credit cards. Any staff member with a company credit card should submit the receipts to the accountant at the end of the month for reconciliation. Some businesses have the policy that any expense without a receipt comes out of the employee's paycheck. Check your state laws to ensure you're allowed to deduct this type of expense. Auction deposits. Here's another area ripe with opportunities for theft. If you're holding live auctions, you need controls around the winning bid amount, the total the customer paid, and the amount that was deposited. Also, make sure no one entered the unit between the time the lock was cut and the auction was complete. Online auctions have helped eliminate to eliminate some of this risk. If you haven't made the switch yet, you may want to consider it. Whether you conduct your self-storage audits yourself or hire someone to do them for you, it's critical that they be done regularly. In addition to uncovering possible employee theft, you might find other aspects of your business that require attention. Magen Smith is a former self-storage manager turned certified public accountant (CPA). Her company, Magen Smith CPA LLC, helps storage operators understand the financial side of their business. Services include monthly financial management, bill-pay functions, revenue management and strategy. She also offers a curb-appeal checklist available for download and has created an online revenue-management course complete with checklists, cheat sheets and guides. For more information, e-mail magen@selfstoragecpa.com; visit www.selfstoragecpa.com. Source: Reader poll at insideselfstorage.com 71% We use a daily tracking system to monitor cash receipts and deposits. Our bookkeeper, owner or third-party manager regularly reviews reports and statements. 59% We limit the number of staff with access to banking information. 59% We regularly conduct an onsite financial audit. 35% We limit the number of staff authorized to handle cash. 29% We don't accept cash, only credit cards. 12% We trust our employees implicitly and don't monitor how money's being handled. 6% How does your self-storage business ensure money is handled properly by employees at the facility level? 24 ISS I December 2018 www.insideselfstorage.com

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