As the first quarter of 2017 comes to a close, many firms are reviewing the goals set in January and comparing them to the results of today. Firms are discovering our industry’s new normal—historically low mortgage defaults coupled with high costs of compliance—requires a new approach in order to regain a strong financial position.
No matter your alma mater, Business Management 101 taught us the only way to improve profit margin is to increase revenue or decrease expenses. Increasing revenue is more invigorating, but success is gradual.
While cutting expenses isn’t without challenges, it is more controllable than increasing revenue. When reducing expenses, one of the first line items considered is salary cost, which is where most firms tend to focus. However, I invite you to that take that examination to a different level with a different view.
Explore your expenses in the following, often overlooked, “overhead” categories to determine what percentage of each revenue dollar you are spending in these areas:
- Case Management System
- Case management system
- Licensing fees if off the shelf
- Cost of developers if proprietary
- Cost of business analysts/administrators
- Cost of servers
- Cost of end user support
- Software Upgrades
- BCP/DR (co-location facilities; redundant servers; etc)
- Network testing
Billing & Collections
- Responding to rejections/adjustments
- Payroll processing
Accounting & Finance
- Financial reporting
- Trust accounting
- Lease (if site(s) are non-owned)
- Cost of ownership/unoccupied space
- Equipment leases
Are the numbers what you expected? How do they compare with your colleagues or your competition? If you are less than satisfied with the outcomes, we welcome the opportunity to talk to you about the right solution for your unique situation.
In the words of Jack Welch, “Change before you have to.”