Managing multiple business transactions, assets, and bank accounts that all require escrow processing, also requires extreme organization.
This element is key for any entity that needs to securely hold funds for a third party – think attorneys, property managers, title companies, real estate developers, resident care operators, etc. – as it helps ensure oversight of account segregation with efficiency and ease.
That’s where a strong escrow solution – a unique financial tool that offers both organization and efficiency – can be a critical tool.
For example, attorneys that need to hold client funds in escrow benefit from a process called account segregation, which allows them to create sub-accounts – an account for each client that they have an escrow-based relationship with – within a main bank account. This feature saves the attorney time, as they don’t have to open a separate bank account, and they don’t have to wait days or weeks to get their client’s sub-account up and running.
The attorney can even open sub-accounts for multiple clients in bulk – streamlining the process, while saving time and money.
What does it mean to have a sub-account? In this scenario, an escrow solution allows the attorney to open, close, and control the cash flows from each sub-account, all while providing detailed visibility.
Have a need to transfer funds from one sub-account without disrupting the others? An escrow solution makes that possible.
Need to provide reporting on each sub-account? An escrow solution tracks and provides that data, enabling the attorney to download statements and reports all in one place. Statements and 1099s are automatically sent directly to the attorney’s client.
“Escrow solutions are a product that most entities don’t think of needing right away,” said Brian Guaghan, Head of Treasury Solutions Products at Valley Bank. “But the value they bring is immense. When you’re managing funds for multiple individuals, say in the case of a property manager who has to manage tenant security accounts, you realize that having a financial tool that simplifies the process of collecting, storing, and tracking those funds is essential to helping your work run smoothly.”
“Imagine if every time you welcomed a new tenant that you had to open up a new bank account to store their funds,” continued Guaghan. “It is an incredibly cumbersome process and keeping track of all those details would not only be time-consuming and complex but daunting. Escrow solutions help save time and increase productivity, which ultimately has a positive effect on your bottom line.”
If you experience difficulty managing multiple separate accounts, it’s probably a great time to consider using a more robust escrow solution.
Here’s what to look for:
Independent operation for each sub-account. The right escrow solution will allow you to open sub-accounts directly and manage each sub-account independently, meaning an action you take on one account won’t impact another.
Assimilation is key. You’ll also want a solution that’s designed to assimilate to your existing business process so that your transactions can be processed without any interruption to your day-to-day operations. Whether facilitating a one-time deal or overseeing transactions is a regular part of your business, you want a solution that makes the process seamless, secure, and successful.
Single sign-on access. Having multiple sub-accounts under one umbrella is great. What’s even greater is being able to access them all after signing on one time into one platform. Not every solution offers this feature, so it’s important to find one that does.
FDIC insurance at the sub-account level. Security is a huge part of managing third-party funds not just by protecting it from cyberattacks, but by making sure the solution and banking partner you choose can insure the funds in every sub-account you have.
Now that you know what to look for, it’s time to ask yourself: how are you managing funds held in escrow for your clients? And, do you have the capabilities to manage these funds in an organized way? If the answer is anything less than a resounding “yes,” it’s time to make a change for the benefit of you and your clients.
Let’s get started. Learn more about our Escrow Solutions and discover how we can improve your business transactions, while you focus on what’s important – like your success.
For informational/educational purposes only. The information in this content is not advice on legal, tax, investment, accounting, regulatory, technology or other matters. You should always consult your own financial, legal, tax, accounting or similar advisors before making any financial or investment decisions, or before entering into any agreement for Valley products or services.
