Eight Tips for Better Escrow Accounting Procedures
Have you ever had to go back and research an earnest money deposit, a wire or a disbursed check, and spent hours trying to determine which file it relates to? That’s valuable time you could have spent doing other things, like performing closings, getting new business or even spending time with your family.
Much of the frustration and time spent researching escrow account transactions can be avoided by following these simple tips.
- Write the file number on each check that will be deposited at the bank. Then, keep a copy of the check with the handwritten deposit slip and electronic bank slip (showing the date the check was deposited).
- When making daily deposits (multiple checks in one lump deposit), prepare a handwritten deposit slip, itemizing each check, the amount and corresponding file number. Staple the handwritten deposit slip to the bank receipt (showing the full deposit amount and the date it was deposited) and a copy of each check that was deposited (with file numbers written on them).
- Keep a wire log noting the amount of each wire, the date it was received or sent, the name of the party and the file number each wire corresponds with.
- When issuing a check, make sure to place the file number somewhere on the check, either in the memo field or at the top.
- If you have pre-numbered checks, make sure the check number on the printed check matches the check number in your title and escrow system.
- Reference the file number and/or name of the buyer/seller on wire instructions so this information will appear on the bank statement.
- Always keep copies of deposit slips, checks received, wire confirmations, voided and cancelled checks in the corresponding file folder.
- Create a monthly reconciliation folder (electronic or paper) that includes the following items:
- The original bank statement from that month (or a copy if you don’t receive the original)
- A copy of each check that was deposited, along with the handwritten deposit slip you prepared and the bank deposit slip
- A wire log from that month with wire amounts, date issued, file number and name
- Wire confirmation slips
- Copies of all voided or cancelled checks
- Bank reconciliation report packet: monthly three-way report, open file listing or trial balance, outstanding checks, deposits in transit, unmatched wires, adjustments, file ledgers for any files with shortages, reconciliation detail, check register, receipt register, wire register, miscellaneous documentation for reconciling items
By following these tips for your escrow account, you can quickly and easily go back and research transactions – saving you time and freeing you up for more important tasks.
Want to learn more about escrow audit tips? Click one of the links below to read up on this topic:
- 10 Tips for Surviving Your Next Escrow Audit
- 13 Guidelines to Prepare Agencies for an Escrow Audit
- Learn more about our financial services for Title Agencies
*Updated as of November 2021