loan servicing software community bank small business


The defi Team Automation, Compliance, defi CONNECT, defi INSIGHT, defi MANAGED SERVICING, Digitalization, Fraud, Loan Management, Servicing Systems, Simplifying Processes, Technology

loan servicing software community bank small business

Unlike loan originations which has a relatively short start to finish cycle and uses automation extensively to bring consistency and speed to the process, the cycle for lease and loan servicing is significantly longer. With many loan terms now extending to 84 months, servicing has placed greater operational demands on lenders. 

Adding to the challenges of efficiently managing lease and loan servicing, the economic downturn of 2020 brought financial stress to millions of borrowers. Managing numerous long-term loans combined with the additional work managing collections during difficult economic conditions has forced many lenders to consider the advantages of outsourcing accounts receivable and collections. If you find yourself mulling over such a decision, here’s some perspective regarding the benefits of outsourcing accounts receivable and collections.

Greater Efficiency In Managing Accounts Receivable

An established and experienced managed servicing outsourcing provider has the technology and integrated systems that efficiently manage accounts receivable. Whether payments are received via lockbox, ACH, convenience checks, or balance transfers, the outsourcers’ payment processing and accounting systems ensure real-time updates to a general ledger chart of accounts. Then, portfolio balances are automatically mapped to your corporate general ledger, so the account is always accurate and up-to-date. 

A quality managed servicing outsourcer has the technology and processes to support other vital accounting activities such as reconciliation and cash disbursements, account payoffs, research for rejected and suspended items, and reversals.

Mobile Account Management

An outsourcing provider can make it significantly easier for your borrowers to manage their accounts. Mobile applications allow borrowers to arrange ACH enrollment and one-time ACH payments, access payment history, download statements, and update contact information. 

Mobile applications benefit both lenders and borrowers by bringing the convenience of secure anytime, anywhere access to account information. This ease of access reduces call center inquiries and requests regarding account status and payments. The ability to access online statements eliminates printing and mailing paper statements which ultimately reduces operating costs.

Greater Efficiency in Managing Collections

Collections present an added level of complexity in lease and loan servicing. Efficiency and compliance are the operative words regarding recovery in delinquent and default accounts. A competent collections outsourcing provider has the technology, methods, and compliance controls to handle these tasks far more efficiently than an in-house collections group. 

Capitalizing on Innovative Collections Technology

The best outsourcing providers employ technologies that significantly improve collections efficiency and proactively provide information to help anticipate and mitigate risk. These technologies include: 

  • Predictive analytics can help identify accounts with a propensity to become delinquent. The outsourcing provider can then initiate an outbound collection campaign to mitigate losses proactively.
  • Fraud notification and investigation services provide early detection of fraudulent accounts. 
  • Automated electronic notifications provide early warning signals of pending defaults, bankruptcy filings, and updates regarding relevant bankruptcy activities.
  • Alternative data sources assist in skip tracing to confirm borrowers and their locations quickly.
  • Workflows and decision rules will track and manage delinquent accounts to ensure consistency and compliance.

Proven Methods Of Maximizing Recovery 

An experienced outsourcing collections provider has developed and refined methods proven to be effective in maximizing recovery. Ongoing analysis of accounts and recovery strategies, implementation of automation technologies, and the addition of data sources that improve decisions all play a vital role in maximizing recovery. Experienced collections providers know that the reason for delinquencies and defaults differ from person to person and collections strategies need to address the different stages of delinquency. The best collection methods employ a multitiered process summarized in the table below.

A Better Approach To Reducing Compliance Risks

Maintaining compliance with federal and state regulations can be taxing for any lender. Dealing with regulations within the collections process is particularly challenging. The Servicemembers Civil Relief Act, Fair Debt Collections Practices Act, Electronic Funds Transfer Act, and the Telephone Consumer Protection Act are all associated with collections practices and need to be adhered to when collecting a debt. The best collections outsourcers remove the risks that come with managing collections in-house. A legal and compliance team monitors federal and state regulations to ensure that proper controls including: 

  • Automation 
  • Workflows 
  • Decision rules 
  • Employee training 
  • Independent audits

are implemented throughout the systems and processes that manage collections. Eliminating compliance risks can be one of the most significant advantages of working with an experienced outsourcing provider.

Yes On Outsourcing Accounts Receivable And Collections

Outsourcing can be a smart move for auto lenders who want to devote more of their time and energy to loan origination while cost-effectively managing the accounts receivable and collections aspects of lease and loan servicing. An experienced and well-established outsourcing provider has the technology, resources, and proven methods to handle receivables and collections far more efficiently than most lending institutions. Outsourcing can also remove the worry many lenders have concerning federal and state regulations. For many auto lenders, outsourcing accounts receivable and collections can be the fastest road to improved performance at lower operating costs. 

Getting Started

defi SOLUTIONS provides a complete range of managed servicing outsourcing services, including accounts receivable and collections, as well as configurable lease or loan origination systems, loan management and servicing, analytics, and reporting software solutions. If you’re looking for more efficient ways to manage your lease and loan servicing, we’d welcome the opportunity to work with you. Take advantage of the benefits of managed servicing outsourcing and contact our team today.

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