Top 7 Must-Have Loan Collection Tools & Features
The right Loan Collections tools are essential for reducing risk and managing deliquencies, especially during the COVID-19 pandemic. Economic struggles are stifling businesses and employees alike, and worldwide, many lenders are experiencing issues with borrowers defaulting and difficulties collecting.
As a lender, especially during this time, one must exercise proper risk management to ensure minimal loss and maximum gain. Achieving this requires automated systems that provide clarity at every step in the lending process. Though loan companies differ in size as well as the kinds of customers and industries served, managing deliquencies is a common concern. However, the process can be less painstaking with the right tools. To successfully maneuver the new landscape, we must assess the loan collection tools necessary to improve the process. LoanCirrus gives businesses the ability to manage these processes adequately.
Here are seven must-have loan collections tools (found in LoanCirrus) that are significant to your business’s success as a lender.
The Collections feature is a tab in LoanCirrus where lenders can see at a glance loans in arrears by date, loans not yet in arrears but coming due. This allows you, the lender, the following functionalities:
- Management – track and manage loans in arrears by date
- Planning – see loans not yet in arrears but coming due and plan proactive communications with borrowers.
- Bulk Repayments – Use this feature to import bulk repayments for loan accounts, thereby increasing efficiency.
A start-up loan company found they could only collect on about 20% of the loans they issued. Upon examination, the company did not have a structured approach to loan collections, and all processes involved manual labor. The losses meant that the stakeholders were not able to break even on their investment. With the Collections tab in LoanCirrus, the young start-up was able to quickly identify delinquent loans and plan customer communications based on loan repayment dates. It’s said that “Knowing is half the battle.”
- Intelligence/Reporting (Risk Reports)
Risk management is vital, especially during such a critical period. Generally, Intelligence/Reporting tools in LoanCirrus give lenders a snapshot of how business is going. However, the Risk Reports in particular allow lenders to:
- Arrears Age Report – See risk levels by aging of arrears for a specified date range
- Collections Due Report – Access risk level receivables for a specified date range
These Reporting/Intelligence tools help you to know at a glance how well you’ve been managing your risk and may, in turn, allow you to develop new strategies to improve your loan collection process.
- Communication Preferences
No two borrowers are the same. As such, the communication methods that work with one borrower may prove insufficient when collecting monies owed by another borrower. The Communication Preferences tool allows you to choose how you will interact with each borrower based on your borrower preferred communication methods (whether SMS, email, etc.). This LoanCirrus feature helps lenders to automate and send out customized messages on a client by client basis. It may even improve the speed at which borrowers repay because they receive information on payment dates, etc., via communication methods that they use and prefer.
- Communication Settings (for Admin)
Loan collections can require rigorous communication processes, and can be quite arduous if handled manually. In LoanCirrus, Administrators in each lender’s system can use the Communication Settings to create automated messages that send out scheduled reminders to borrowers based on pre-defined triggers. That means, you can cut down on time expended on manual communications by sending out automatic notifications via email or text that payment is upcoming, due, or late. These Communication Settings in LoanCirrus gives lenders the capacity to run their loan businesses effectively.
“Automated operations ensure that jobs are not forgotten or run out of sequence, that prerequisite jobs are completed successfully, that the input data is correct, and that any special processing is performed,” states Pat Cameron, Director of Automation Technology at HelpSystems in her article “Automated Operations: 5 Benefits of Automation.”
Automation is the way of the world. Technological advancements have made life easier year after year, and LoanCirrus intends to continue this trend. Through automation, borrowers have the opportunity to handle all their loan needs online without face to face contact, which is of extreme importance now, during the COVID-19 pandemic. Businesses that have not capitalized on the online market continue to see significant reductions in their profits due to the drastic decrease in walk-in customers.
LoanCirrus helps lenders to digitize their business from loan application to repayment, securely and effectively online. This way you can better manage the business of lending (including handling delinquencies) by automating many of the processes—including those previously discussed about how automating communications can help with collections.
- Debt Collectors
Debt collectors are a critical part of the loan collection process. They help lenders collect on loans in arrears and enable positive mediation between borrowers and lenders. Through LoanCirrus, you can add debt collectors, whether they are companies or individuals. This makes it easier to assign particular loans in arrears for collections.
The economic hardships faced in 2020 by people across the world have resulted in more delinquencies. Lenders may choose to keep this in-house before they outsource or ensure they review their collection policy, particularly amid COVID. With this in mind, we urge you to be mindful, do your due diligence, and exercise empathy when dealing with delinquents. We will delve more into Policies, Processes, Best Practices & Methods for Loan Collections in an upcoming article.
In the meantime, you can check out our blog on Handling Borrowers During COVID-19 for some useful information.
Though technically a service, with REACH lenders can create and be online in minutes with their own ready-to-use and extremely user-friendly website. Use REACH as your very own online origination solution to onboard and handle borrowers. It is completely integrated into LoanCirrus or can be used with your current website and lending platform.
REACH helps clients can sign up on the website, fill out the details requested, and apply for a loan. Borrowers can better manage their loans as they can access their schedules, payment, and transaction details. In the end, customers have more power over the process, and they will feel more encouraged to clear their debts.
It is crucial to have a bird’s eye view of your business, especially in the current economic climate. Loan companies must assess their debt collection policies and exercise empathy when dealing with their clientele. LoanCirrus helps lenders to do this effectively with tools that improve the communication process, origination intelligence, and autonomous lending.