Why SME and corporate lenders should use a loan management system

By
inGain team
July 14, 2022
5 minute read

If your company provides financial services for small and medium-sized enterprises (SMEs) or corporations, you should most likely be using a loan management system (LMS). Business lending is already a fast-growing industry, but using an LMS can take your lending products to the next level in terms of opportunities for growth.

What is a loan management system?

An LMS is a lending solution that facilitates end-to-end lending processes for both online and offline operations. A full lending life-cycle management system enables lending processes to be fully automated, from customer on-boarding through to loan origination, loan servicing, collateral management, warnings and debt collection.

The loan origination process covers everything up to your company issuing a business loan. The processes will be customised to fit your business model, and can be adapted to cover a broad variety of business lending products.

Features you should expect to have include the option to register a business customer with several authorised representatives on-boarding.

Once the loan is issued, further management and communications processes are also taken care of by an LMS. Your solution should include tools for your company’s employees to manage all communications regarding repayment, debt collection and loan rescheduling. An LMS enables you to configure reports and a dashboard according to your business needs, or connect the database to your business intelligence tools.

Business lending product features

Keep your company’s future expansion in mind and go with a solution that can faciilitate a broad variety of business loans. An LMS should allow you to easily develop a new product from a catalogue. Depending on the chosen product, you should be able to adjust terms and calculation methods based on interest rate, commission, penalties & grace period, early repayment policy, etc. Here are the types of business lending products you should expect your LMS to cover:

1. Instalment loans

An LMS should support the most common methods for calculating instalments including annuity, linear, flat and other methods, as well as accounts for commissions, management fees and extra payments. Offer generation modules can provide easy loan scheduling opportunities for individual risk based offer provision to the customers.

2. Line of credit

An LMS should support several methods for calculating line of credit, including interest-free periods, commissions and management fees. Look for solutions that also allow you to issue plastic cards via a third-party card issuer.

An LMS that includes a white label website and mobile application can include a convenient customer self service portal, where a customer can initiate a payout to their bank account. Choose a solution with workflows that allow you to easily manage customer information updates, verification and scoring after a predetermined time period (e.g. once a year).

3. Secured loans

An LMS should support secured loans, e.g. vehicle leasing or commercial property loan, or a credit line with a collateral. In this case collateral management is important part of loan servicing and should include asset valuation/ re-valuation and insurance management, as well as, option to connect to the third party registers e.g. land registry, car registry etc.

4. Invoice factoring

An LMS should contain built-in options for pre-approved loan limits, as well as automated loan approval within these limits. A solution can provide for counter party registration, verification and scoring options. Customer information, verification and scoring can be updated according to predefined rules (e.g. every 6 or 12 months).

5. Additional features

Some additional features you may want to look for when choosing an LMS for you business lending need include an option to acquire new customers via brokers and affiliate networks. This feature can be further streamlined into a white-label website or mobile application with a predefined customer journey, including multiple company representative onboarding, as well as ready customer self service portal.

Integration with payment gateways for automated loan disbursement and payment collection can also further automate your company’s lending process. If your LMS has the capability to offer real time data for your business intelligence tools, such features will enable you to react more quickly and make better business decisions.

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InGain has been supporting business for over 10 years by providing an out-of-the box, yet fully customisable loan management system. On top of our core system, we deliver integration services for custom feature development and system connections. With hundreds of projects under our belt and more that 50 clients around the world, InGain has the industry expertise to take your company to the next level.

Whether your business requires our full system or just individual modules – our products are specifically created for instalment loans, auto leasing, mortgages, line of credit, buy-now-pay-later, payday loans, invoice factoring and more – we’re confident that we have the solution that’s right for you!

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