Flawless loan management is at the core of a successful property finance company. However, as your loan portfolio grows, it is easy to lose track of what is being done. This is especially true when there are multiple loans at different stages of the life cycle.
Even with top loan management practices applied, human error remains a factor and increases alongside the volume. As a result, even the smallest mistakes can have tremendous financial impact.
Loan mismanagement will damage more than your budget - it will negatively affect the trust and relationships you’ve built. When speaking of money lending, both factors are essential and are just as important as generating income. This is why today we are going to share our ten loan management tips that will help you stay on top.
10 Loan Management Tips for Property Finance Companies
1. Don’t work on spreadsheets
Many property finance companies run their loan management on Excel spreadsheets. We have previously outlined why this is a bad practice: it poses a threat of human error, security breaches and team miscommunications. You can read a more extensive explanation here.
In other words, while handling loan management via spreadsheets is an industry standard, it is not the best practice. The cons and dangers outweigh the benefit, and therefore you should not work on spreadsheets - even if everybody else is doing it.
2. Make your reports easy to analyse
Reports are a crucial part of business loan management. It is important to be able to analyse them easily to spot threats, opportunities and trends. However, it can get time consuming to put them together in a digestible format.
The key reason behind the rise of popularity of SaaS (software as a service) loan management software is its ability to compile visual reports within seconds. Not only it saves time collecting data but presents it in a visual format right away, taking away the need of doing it manually.
3. Invest in SaaS software
As we have briefly touched upon in the previous tip, SaaS loan portfolio money management is quickly gaining popularity. Not only does it make reporting easy but is also a modern, trustworthy replacement of Excel sheets.
Loan payments, loan origination, interest payments, cash flow and many other features are available on a loan management platform. Most of the SaaS solutions for financial services on the market are fully customisable to the individual needs of every business and offer a set of different features, catering to the finance sector they’re targeting. For example, Hypercore.ai is focused on SME property lenders and thus brings functionality small property lenders can benefit from: e.g. risk management.
4. Stay on top of compliance changes
Compliance changes and is updated all the time when it comes to loans and finance in general. It makes it very easy to lose track of them and this can lead to both financial and legal issues. Another perk of loan portfolio management platforms is that they automatically update technical aspects in accordance with the compliance changes and requirements.
5. Automate as much as you can
Components of managing a loan include repetitive manual tasks. They are not difficult to handle but usually come in big volumes thus cost a lot of time. Good news is that now that we live in the digital age most of them can be automated.
We strongly recommend allowing artificial intelligence to take over tasks that are repetitive and easy to frame. This way you will save time that can be used addressing matters that need a more focused approach.
6. Monitor your KPIs
Monitoring and measuring KPIs is vital for the business to accomplish its objectives. KPIs enable understanding the performance and health of the business, therefore recognising areas that need adjustments to achieve strategic goals.
However, gathering the numbers once in your selected period of time is not a difficult task but it can be time consuming. This is the type of a task we mentioned in the previous point that can be automated. Similarly to reporting, this is another feature that makes SaaS very appealing to property finance firms.
7. On board AI
There are a lot of thought processes going into loan servicing and management - as well as mundane manual tasks. Onboarding an AI to assist with the latter will enable you to focus on areas that will accelerate the growth of your portfolio as opposed to spreading your time thinly between the two.
8. Create smooth workflows
The success of loan management companies strongly depends on workflow. And, unfortunately, there are no options of creating it when working with Excel spreadsheets - another reason to give them up.
Assessing risk, interest rates and gross margins are crucial components of loan management but both are particularly difficult to set up in Excel. These procedures require building macros. Creating and using them demands a certain degree of knowledge. If the person who has created them leaves the company without training the newcomer, you will end up with an unusable spreadsheet on your hands.
As opposed to that, most SaaS lending platforms are designed to keep everything at your fingertips, allowing you to build a seamless workflow suitable for your business.
9. Eliminate human error
The easiest way to avoid human error is to remove human interaction. Handing most of the tasks over to artificial intelligence minimises the threat of mistakes that result in financial losses. By adopting a loan portfolio management platform, you prevent potential mistakes and deal with most tasks much faster than a person would.
10. Be mindful of your time
Everyone is familiar with the expression ‘time is money’, but not many take it on board. Time is the biggest investment you as a business owner can put into your business. If you hate the idea of wasting your budget, you should hate the idea of wasting your time just as much.
This is why adopting usage of a SaaS loan management system is a way forward. By investing money in software you will save a lot of time you can then invest into the growth of your business.
Loan management is a multi-stage process that, if done wrong, can run to high financial loss. With the stakes so high, there is no place for mistakes, but human errors do happen. To simplify the process and eliminate the threat of potential losses due to human factors, the best course of action is getting SaaS loan management software.
Hypercore.ai - SME Loan Management System
Having worked in the loan industry for many years, we grew aware of the most common issues property finance companies face. We have also identified a market gap for the solution. Putting together our knowledge and the newest technology, we have created a SaaS lending software that addresses the biggest pain points of SMEs.
Hypercore.ai is a cloud-based software you and your team can access via browser from anywhere in the world. Modern, intuitive and simple to customise, our platform makes loan management easier than ever before.
Curious what it can do for you? Get going with a free trial.