The client, now one of the top 30 mortgage lenders by origination volumes in the USA, operates in 45 states, has over 80 retail branches with over 800 employees.
In 2004 experiencing a rapid growth in business, the client was being consistently challenged by accounting issues. Operating in a highly regulated industry, having key financial information on a daily basis was a big challenge. Warehouse Banks insisted on closed monthly accounts sooner. A rapid growth in business volumes coupled with a high attrition of skilled accounting staff made things difficult. In August 2005, Sterling was approached to see if outsourcing of accounting functions could help client cope up with these challenges.
How we helped:
We looked in to the business processes and the accounting framework of the client. Two of our accounting staff and a Chartered Accountant underwent a brief online training on the accounting software used by client. Business processes were mapped properly with the accounting software functionalities. In collaboration with the client, Templates in Excel were devised to import loan data from the Loan Origination Software in to the accounting software with a view to reduce manual handling of loan data. Sterling assisted the client, in developing MIS reports to suit to their reporting requirements. Initially, routine processes like AP invoice processing, Bank reconciliations [including warehouse lines] were taken over, gradually moving to higher end processes like accounting for funding, settlements, secondary market operations, payroll and investments.
What we delivered:
Initially, Sterling could help the client grow by 50% without adding any accounting personnel at their end. With an average per hour rate for accounting staff of less than 50 % of the US costs, saving to the client was significant. The client’s record of timely submission of financial data to the regulators saw a marked improvement. Accounting arrears became a thing of past. Monthly reconciliation of Warehouse Bank accounts within two business days has been a routine never missed. Monthly closing of accounts is accomplished in five business days from month end. Old receivable balances from Title companies and borrowers were researched to furnish client the exact information for pursuing these amounts, most of which could be recovered.
Going the extra mile:
Since 2006 the client’s mortgage production has grown phenomenally by over 400% in an industry that has shrunk by 68%. Sterling has been supporting the client all along not only in providing accounting services but also assisting the client in setting up a remote operations centre in India in 2008 to provide for critical back office support for its Mortgage banking activities.
Mutually beneficial relationship:
Sterling’s belief of creating and sustaining a mutually beneficial relationship has seen the present relationship with the client survive turbulent years faced by the mortgage industry.