Don’t run the risk – 5 must-dos to protect your rental agency from the inside

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No business owner likes to think about falling victim to internal fraud, but it’s a very real threat for any business – and even more so for rental agencies that handle frequent client fund inflows and outflows.

According to the ACFE’s 2022 annual report on fraud, organisations worldwide are losing $4.7 trillion to occupational fraud each year, with real estate leading the pack as the industry with the highest median losses.

After almost 20 years of industry experience, PayProp believes you can protect your business in just five simple steps. The best part is that with our bank-integrated payment automation platform, managing risk takes altogether 15 minutes to complete, tops!

1. Check your permissions annually

Permissions are your first and perhaps most important line of defence against internal fraud. You can adjust how many users it takes to perform important actions, with what level of access.

A staple of good risk management is to enforce a separation of duties for certain actions or transactions, which means no one employee is able to complete it single-handedly or perform risky combinations of actions, such as creating payment beneficiaries AND paying them.

2. Check users

It’s also a good idea not to give users permission to create other users! If a user is able to do this, they also have the ability to create a second user profile for themselves, give themselves permissions they shouldn’t have and use this second profile to commit fraud. So while you’re checking permissions, check that all users are only listed once in your system.

Similarly, you should check that all listed users are still in your employ. Anyone who has left your business should no longer have access to your system.

3. Check your audit log

PayProp’s audit log sets out who did what and when from the moment they log on. Records can never be edited or deleted, so even actions taken by users who have been removed from the system will still be visible.

By regularly reviewing your audit log summary, whether weekly or monthly, you’ll start to recognise patterns of behaviour, making red flags even easier to catch.

4. Check on credit notes

Thanks to PayProp’s bank integration, there will very rarely be a need for an agent to create a credit note. If the money has been paid, it will reflect on your trust or client account.

While you’re already checking your audit log, take a moment to look through the reasons entered on any credit notes that were created during the month. PayProp also allows you to limit the ability to create credit notes to certain people only

5. Check if deposits make sense

Generally speaking, deposit funds should only be used to pay for any necessary repairs after a tenant has moved out of a property, and the balance must be paid out to the tenant. 

After a tenant has moved out, PayProp’s Security Deposit reports make it easy to keep track of payments into and out of a tenant’s account.

Check these reports regularly throughout the tenancy as well, to see if each tenant’s balance is correct, and ensure that all deposit requests and approvals are valid.

15 minutes a month buys you ongoing peace of mind

The high frequency of transactions in and out of a rental agency makes you a more likely target for fraud, and business owners need to be hands-on to mitigate the risk. It’s not just monies that are on the line when an internal crime is committed – the damage to your reputation and subsequent decrease in client retention are sometimes irreversible. Luckily, you can personally safe-guard your agency with very little effort. 

PayProp’s intuitive security features allow you to be proactive against internal fraud and keep your business running smoothly. Just 15 minutes a month can spare you a lifetime of headaches.

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