Top 10 tips for an efficient closing department - Tip 3: automated Accounting
having your Accounting software and your Back Office software be All-In-One makes a big difference in the number of closings per month each staff person can close.
Creating an efficient closing department - Tip #3: automated accounting
How does your closing department stack up against the best in the country. How do you get each person in your closing department to close more transactions ? This question matters because a closing / accounting person costs on average, $60,000 per year.
Our #3 tip: Use software that automates your accounting in a single platform. We have identified the most productive staff at brokerages across the country, and interviewed them to find out how the are so productive. The efficiency in the best run closing departments is much higher than you would think. Likely, it is much more efficient than your own brokerage. In our study, we found the best closers, will do the work of 4 accounting staff in a typical office.
In this series of 10 tips, we are going to reveal “how they do it”. How is it possible that these closers process so many more transactions each month than the typical office ? We will also countdown the performance for the top 10 closers in America. The 8th place finalist’s production will be revealed at the end of this article.
Our next tip: Use software that automates your accounting in a single platform. All of the Top 10 closing departments do commissions calculation & accounting in the same system. The primary reason for this is simple - it saves time.
For a brokerage without automated back office software, these are the steps they need to take to close a transaction. For each of these steps, we have measured the time it takes to complete these steps in seconds.
You can see that many of these steps involve making entries in Quickbooks. When your back office software contains an integrated accounting system, no one of staff needs to do any of this work. It is all completed automatically by your software. While these measurements are in seconds, over a large number of transactions, the seconds add up to considerable wasted time in your closing depart. The next graph shows the variance in time to close transactions with (and without) integrated accounting. This graph shows the time for simple deals with only one agent being paid. For more complex deals with Teams, overrides & referrals - the amount of time is even greater:
Another reason to use a back office system with integrated accounting is for fraud detection. When embezzlement happens in a Real Estate office, it always happens in one of two areas. First, there is theft by stealing money with unauthorized checks written against the escrow accounts. Second, there is the surprisingly common practice of commission proceeds being deposited into the embezzler’s personal bank account. With Quickbooks and back office systems that use Quickbooks for accounting, this is easy to do. An bad actor will record the agent’s commission checks in Quickbooks, but not record the deposit (because the deposit was never put into the company’s bank account). In an operation where the broker is not the bookkeeper, this kind of theft can go on for years before it is uncovered - if ever.
Tip #3 takeaway: Use a back office software that has complete accounting built into the application. Quit using 3rd party accounting systems like Quickbook - to save time and improve security.
Now, as we count-down the top 10 most efficient closers in America from our study:
From our recent study, #8 was Lanee from Coldwell Banker in Indiana. Lanee personally closes 326 transactions each month. While very impressive, the numbers for the Top 3 finalists are much, much higher. Read each of the 10 tips in this series to see the production numbers for the most productive closer in America.
Here are a few examples of reports that combine agent production with Profit and Loss
These types of reports are only possible if your back office software is also your accounting software... they let you uncover the specific numbers that connect agent productivity and the brokerage profitability
Profitability per agent
It costs a certain amount of money to run a Brokerage. Those costs have to be paid entirely by the Broker/Owner's share on the commissions closed. Since your accounting system knows how much money it costs to operate, it is possible to see if the earnings from each agent are enough to cover the costs associate with each agent
What if you have too few agents earning most of the money for an office. This can make the Brokerage at risk for becoming unprofitable by losing just a few agents. In this example, 22% of the monthly overhead is being paid by 9 out of the 80 agents that work in the office. And each agents only represents a maximum of 3% of Overhead. So that's a balanced office.
CMOE - Current Month Overhead Expense analysis
Current Month Overhead Expense analysis. Over time, each office establishes a baseline for how much it costs to "have the doors open". When you analyze the transactions that are pending to close, you can see how many months into the future will our operating costs be covered - based on the transactions that are currently pending to close
Multi factor performance to Budget
the Profit and Loss is a key performance indicator. Often a firm will setup a budget and compare their Profit to their Budget. But there are lots of other key performance indicators that don’t show up on a Profit and Loss report. darwin.Cloud lets you see all your KPI compared to budget or goals - all on one report.
Ready to evolve?
Request a demo or learn more about the power of darwin.