Choosing Loan Accounting Software for an NBFC

Banks and NBFCs need loan accounting software as that helps in the process of sanctioning a loan. This software handles all the functions of obtaining a loan, from the inquiry of the loan to end-to-end management of the loan process. This software also takes complete control over the debt collection process. By using a cloud-based solution, you can see the borrower’s data in a more structured manner and engage with them at every step. It takes control of the filing process, documentation, loan amount calculation, Billing, and termination. This software also gives accurate reports and statements to borrowers. 

What loans can you manage through loan accounting software?

It can help to track almost every kind of loan that your NBFC has to offer, such as:

• Personal loan
• Vehicle loan
• Property loan
• Gold loan
• Education Loan
• Business Loan
• Micro Finance Loan
• Mortgage Loan
• Commercial loan 

This software will serve the client with the following reports:

• Monthly statements 
• Payment history
• Miscellaneous fees report
• Account referencing list 

Features of loan accounting software that will help you:

– Loan Origination: Loan origination is the starting step when a borrower applies for a loan. It includes the whole procedure of application, acceptance of an application, and documentation till agreement to grant the loan. The loan origination process starts when an individual applies for the loan. The lender must go through the borrower’s credit history to check their eligibility. CRM software, i.e., customer relationship management software, makes it easy to fit every individual. 

– Loan serving: Loan Servicing is when a lender has to collect a payment, interest, and through escrow from the borrower. As the nature of loans, payment dates, and interest rates vary from person to person, you can access the payment details on time with the software. It will help you ensure the status of payment.

– Debt collection: Through the software, you can keep track of the lenders whose payment is due. The borrowers will get a notification of the scheduled payment amount from time to time. CRM will make it easy for you to track the history of payments done by every individual. 

– Report and Analytics: This is an essential and profitable feature of using this software. The software will give you analytical reports from time to time to track your organization’s cash flow. You can keep an eye on the individuals and businesses from which you are getting more benefits. Furthermore, it will help you understand your organization’s lacunas also. 

How a loan accounting software can benefit your NBFC:

• Lending process easier: Online application procedure is more accessible for people than the traditional way where the borrowers have to visit the company. Now that they get all the information in a single click, it will be easier for them to access it. If the customer has any doubts, they can raise a query and resolve their issue. 
• Constant customer support: The software provides continuous support for supervening the activities of borrowers. Through the use of Artificial Intelligence, there will always be someone to guide the lenders at each step. 
• Reduces risk: This software helps reduce the risk while dealing with the borrowers. As it manages all the debt collection and tracks the activities of individual customers, there are fewer chances of you forgetting anything. With AI-driven tools, it is much more accessible to meet the deadlines of the borrowers. 
• Speedier way: A loan application, document review, collection, compliance check, and approval process take time. It is impossible to review every document accurately with the speed of AI. This software helps reduce the workload by almost 70%. There is no need to create manual reports also; all the work is now handled by technology itself. 
• Reduces calculation error: It is a high chance of having errors while dealing with the account’s transaction or calculation mistakes due to workplace distractions or heavy workloads. With the intuitive approach, there is no chance of errors as the software use pre-determined rules and procedures while dealing with transactions. 
• Data security: You must protect the borrower’s data. This software will protect the data more as it allows cloud security. This software security mechanism allows you to protect your data using biometric identification or a two-faced authentication method. There is also a way to set up alerts or warnings to protect the borrower’s data. If the lender is aware of suspicious activities, like multiple logins or logins from unfamiliar sources, they can block the lender’s account. 
• Multi-Branch Management: It is impossible to check every branch individually. Traditionally, the top management has to face difficulties while handling the other components. You can see your other branches’ performance rates through the loan accounting software and access them if you need details on an individual borrower. 
• Paperless process: Now that you are using the digital strategy for documentation, it will be easier for you to access the data. Traditionally, the lenders have to store all the files in different bundles, and there are often possibilities of misplacement of these physical documents. With this digitization feature, records will be kept for a longer time. 
• Cost Effective: As a financial institution, you need to hire employees to manage the process of documentation and other work. This software will help you reduce the cost of recruiting an extra employee. The technology will do the work you’ll assign to your employee. This will not only reduce the cost of your institution, but also it will make the business run smoother. 
• Transparency: the younger generation needs proper access to their data to understand the procedure. They need their loan process to be transparent. Here, using this software that helps them to track their activities through dashboards will attract them. 

Conclusion: 

Investing in loan accounting software can be very useful for your NBFC. In case an easy task for both you and your borrower. It can reduce costs, improve customer satisfaction, manage loan inquiries, and perform other administrative activities. After all, you need to be updated with the trend in the market. The development of banking sectors will depend on how well we can use modern technology.