Top 5 mistakes found in a self storage audit
To make sure your business is financially sound, you should have a random facility audit performed on a regular basis, ideally quarterly. Self Storage Audits should be performed by someone outside of daily management, either a professional consultant or an owner. Letting your manager audit her own work is the same as letting a student grade her own test. What are the chances she’d get less than an A+?
When I perform a self storage audit, here are the top 5 mistakes I find:
1. Overlocks performed incorrectly
Every facility should have a policy on when overlocks are placed on late units. This usually happens on the 6th of the month. No matter what day you pick, late units should be overlocked on the same day of each month, and locks should be placed on all late units. When I perform a facility audit, I check that all late units are properly overlocked, to ensure late tenants can’t simply open their unit and move out of your facility without paying their rent. When I first begin auditing a facility, there are always a few overlocks that are either put on the wrong unit, or not put on a unit at all.
2. Complimentary units set up incorrectly
Complimentary units are set up in nearly every storage program for a reason. It is common knowledge not all units rented are rented for money. However, this is a huge risk to our industry. As long as complimentary units are legitimately free and there is proper documentation, they will pass an audit. On almost 100% of first audits, I see complimentary units marked as unrentable units, which makes it very difficult to track how many free units you are giving vs how many units are broken. Only mark a unit as “unrentable” if it is broken.
3. Money that didn’t get deposited into the bank account
One of the biggest risks in self-storage is having your employees collect the money, deposit it into the bank, and reconcile the books. If no one is checking their work, you are asking for theft. Even if you have an outside bookkeeper, they need to know the reports to look at to make sure all your money went into the bank account. Here are a few things I have found where money is concerned:
Not all cash collected went into the bank account.
Manager cashing checks for friends on the company check machine.
Mysterious credits issued on credit cards.
Payments deleted in the storage software.
I could go on and on. These mistakes were made by honest managers who weren’t properly trained in storage. They weren’t trying to steal from the owner, they just didn’t know the proper procedure.
4. Mystery locks on vacant units
Vacant units should have a company lock on them, right? They are vacant, so you aren’t getting any money from them. But I often find non-company locks on vacant units. Sometimes they’re complimentary units that weren’t entered into the system. Sometimes they‘re units that a current tenant moved into without signing a lease because that unit was open and didn’t have a company lock. Sometimes they are part of the managers’ “bonus program” because no one bothered to check and she needed extra money that month.
5. Vacant units not properly locked
Your vacant units should be locked. This is your inventory, so you better keep it safe. Leaving vacant units unlocked and open is asking people to put their stuff in your facility without a lease. Good luck trying to figure out who they are. If you have people sign leases over the phone, kiosk, or outside of management hours, consider having a combination lock on a few units. If someone needs to move in and you can’t come physically remove the lock, you can simply give them the combination and they can take it off. In doing facility inspections, I see lots of little mistakes that can add up to big problems if they aren’t addressed. An operational audit can uncover even more errors in how your business is running. If you don’t have a schedule for having your facility inspected, contact me today.