Rapid growth can be a mixed blessing for title & escrow companies. Although gaining new clients and expanding into new regions means the business is doing well, it can create new operational challenges without careful upfront planning.
In today’s purchase market, the stakes are even higher as purchase transactions require double the work compared to refinance transactions. A strong, scalable process will help title companies maintain the integrity of highly-sensitive operations (such as reconciliations) even amid the complexities of a purchase transaction. Ensuring that daily and monthly reconciliations are completed and backed up by supporting documentation is paramount for businesses to safeguard their business and achieve sustainable growth.
Challenges of reconciliations during high growth periods
Reconciliation management can be a time-consuming and expensive process for title & escrow companies. The day-to-day challenges of conducting reconciliations get compounded during periods of high growth. Surges in order volume or expanding into new states can result in agents not having enough time to properly manage reconciliations. These growing pains can lead to challenges in preventing fraud and error, increasing reconciliation staff, and improving bank partnerships.
Preventing fraud and error
During periods of high growth, agents may be too busy to keep up with daily reconciliations—an ALTA best practice. If agents are being pulled in multiple directions to complete orders and communicate with clients, reconciliation tasks may get delayed or left incomplete. Pushing reconciliation tasks to the end of the month can increase the risk of fraud or error and take up a substantial amount of agents’ time. When the end of the month rolls around and agents are required to perform monthly reconciliations, it’s often a painstaking and lengthy process of reviewing exception reports, cleaning up order accounting, and reconciling bank accounts. Standardizing the reconciliation process and following best practices ensures that title & escrow companies catch audit red flags, such as negative balances, dormant funds, or stale credits.
Hiring and onboarding
Managing reconciliation teams presents another challenge for title & escrow companies that are growing quickly. As the number of transactions increases, title & escrow companies may need to hire new staff to manage reconciliations. Hiring new full-time employees can be expensive and onboarding can be a time-consuming process. If market conditions suddenly change, businesses may end up with a larger team than necessary.
During periods of high growth, title & escrow companies may not have time to evaluate their return on investment with bank partners. As businesses look to scale and grow, understanding certain fees can help discover opportunities to reduce costs. In a recent Qualia user survey, Reconciliation Service users reported that monthly fees, wire fees, and remote deposit fees were the top 3 types of fees they were paying before switching banks. By regularly evaluating bank partnerships and identifying potential bank fee savings, title & escrow companies can continue to accelerate their growth and build business relationships.
How outsourcing reconciliations can support growth
Successfully managing reconciliations can be a time-consuming process as title & escrow businesses grow into new states and regions. Standing up accounting teams and managing operations in multiple locations requires a deep knowledge of state and local regulations. Outsourcing reconciliations to external experts—especially those knowledgeable in regional nuances—can help businesses grow without sacrificing accuracy and client experience. Doing so can help title & escrow businesses focus on growing relationships in new markets instead of spending time on reconciliations.
To be successful in changing and competitive market conditions, title & escrow companies must be agile. Outsourcing reconciliations can give businesses the ability to quickly respond to changes in volume without making drastic changes to their internal team. It can also improve employee experience by saving processors time and allowing them to focus on core competencies, like closing orders and providing support to clients.
For title & escrow companies looking to scale operations while continuing to meet the highest standards of escrow accounting, Qualia Reconciliation Service is an end-to-end managed service that helps businesses stay audit ready, maintain underwriter compliance, and mitigate fraud. Learn how you can reconcile three times faster by requesting a demo with a Qualia expert today.