$1,000 gone missing...

[Aaron Wyssmann]

So here's the story of the missing $1000…

I work currently for a property management company and we have around 300 single family units.  You can imagine that the first of every month is crazy with people bringing in their rental payments and not only that but it means we have lots of cash, money orders, and checks in our office, not necessarily a good thing.

OUR PROCESS

1. The front desk person takes the money and counts it on the front counter right in front of the tenant so the amount is agreed upon.  He then writes a receipt and gives it to the tenant.

2.  He places the tender in an envelope and seals it.  On the front of the envelope he writes the tenant's name, what property address it was for, the date, the amount paid and signs his name as the one who accepted it.

3.  He then places that in a drawer that has a mail slot in it.  This drawer is locked and only two people in the office have the keys, the owner and the book keeper.

4.  The book keeper takes the money out and compares the amount of the tender to the amount written on the front of the envelope.  If they are the same amount he then enters it into our system and it is tracked from there (Appfolio is our rental management software).  He then shreds the envelope.

5.  The moneies are all compiled and a deposit is made.

WHAT HAPPENED?

In April a tenant came in to pay their rent.  She had received some extra money so she decided to pay for three months of rent ($650*3 months = $1950).  She paid $1950 that day ($1000 Money Order, $500 Money Order and $450 Cash) and she has a receipt from our office that shows that's what she paid and we have a copy in our receipt book.  Somehow what got entered into our system was simply the $500 money order and $450 cash = $950.

This month, June, is month three and she received a notice from our company that her whole rent was not paid in May and nothing in June, which of course is not correct.  

We have no idea what happened to the $1000 money order.  You might think, "Well obviously one of them must have stolen it."  The thing is that with the help of the tenant, we have tracked down the money order number that she received from Wal-Mart.  We then contacted Money Gram, the money order issuer, and that $1000 money order has never been processed on their end.  We can make a claim with Money Gram and it is possible that we can still get the $1000 but it will take 60 days before we will know for sure.

WHAT WENT WRONG?

1.  The front desk guy, by his own admission, says that sometimes when it is crazy up front he takes the tender and puts it in his top drawer to help the next tenant in line.  Could it have gotten in a file or fallen down somewhere?  We've turned the office upside down and no sign of it.  He obviously has been told to never do this again.  It goes directly into and envelope and into the drawer.

2.  Did the book keeper misread the amount as only $950 instead of $1950 and miss the other $1000 money order?  Could it have been accidentally shredded?

3. Some other plausible explanation?????

WHAT I WANT TO KNOW

How do you or your company handle taking tenant money?

What are the systems or processes that you use?

What improvements to our systems should we make?

Let me know your thoughts.

[Fred Heller]

I can't think of a better example for the need for an online rental payment system. And I know you're going to say a lot of people don't have access to the internet. But even if only half of them paid online, think of the workload that would cut down.

Your accounting controls seem pretty solid. But I would never, ever accept cash. And I also wouldn't accept multiple forms of payment. One check or money order. That's it.

Good luck!