Research shows that about 12 million Americans per year use payday loans to fill gaps in their cash flow. That translates to over $9 billion spent on loan fees. So if you’re a financial services provider, that’s one product you definitely should be offering.
Payday loans are a type of short-term borrowing where you extend high-interest credit based on your customer’s income. The principal is a portion of their next paycheck, and borrowers can apply for as much as $1000.00. Despite the high annual percentage rate (APR) charged, sometimes as high as 400%, payday loans are still popular for several reasons. Some reasons include:
- The application process is simple.
- Lenders generally don’t run credit checks or demand collateral from borrowers.
- Short-term loans are usually processed fast — in as little as 15 minutes.
Do you want to grow your financial services business by offering payday loans as one of your products? Or perhaps you simply want to streamline your current operations. One of the best ways to do that is to leverage payday loan management software.
What is Payday Loan Management Software?
Despite payday loans being simple to process, as your customer base grows, servicing loans becomes chaotic as each customer has their own terms and payment dates.
That’s where payday loan management software comes in. This software helps you automate the entire lifecycle of the loan process — from application to the last repayment. And if you don’t want to automate the whole lifecycle, you can still choose the components you want to automate as most are modular and customizable.
Advantages of Payday Loan Management Software
As can be expected, using a payday loan management system has several advantages over traditional legacy systems. Here are the most significant:
One of the most significant benefits you’ll get from automating your payday loans is increased efficiency. Payday loan management systems help streamline all your processes, from signing up new customers to creating statements and reports and even sending reminders to your customers. This means there’s less margin for error, thereby helping you maximize your profits with less hassle.
A primary headache in running a financial services business is data collection, management, and processing. It can be a tedious and time-consuming aspect of the business that keeps you from other parts of your operations that can lead to growth.
Again, this is where payday loan automation outshines legacy systems.
Because you can perform most processes on autopilot, it’s easier to manage more clients. As a result, scaling your business (without adding more staff) becomes easier. Of course, this means a boost in your revenue while still keeping your expenses at a minimum.
Improves Customer Satisfaction
Because of the increased efficiency of your processes, you’re able to offer your customers exceptional service. As a result, your customer satisfaction rates will be high. High customer satisfaction rates are essential to the growth of your business as it means your customers will leave positive reviews of your business. Research also shows that customer satisfaction plays a huge role in customer retention in the financial services sector.
Another aspect that impacts your customer satisfaction rates is that your customers don’t have to come to a brick-and-mortar store to apply for a loan. Instead, they can do it in the comfort of their homes. And with the best payday loan management software designed to be mobile-responsive, your customers can also apply for payday loans from their smartphones.
Helps Reduce Resource Wastage
Another advantage of utilizing a payday loan management system is that it helps you reduce waste in your business. For one, it enables you to go paperless, thereby allowing you to save on the money you spend on stationery, printing, and mailing. Apart from that, going digital also helps you save time and human resources as you don’t have to review the documents involved in originating and servicing loans manually.
Key Features of Loan Management Software
What features make for the best payday loan management software?
While most loan automation software come with different features, here are a few you must insist on when looking for your payday loan management solution:
Let’s face it. You built your lending business specifically to meet the needs of customers who’d rather not approach traditional lenders. As such, you need to tailor products that match your customers’ needs. And that means being able to configure unique rules around different:
- states and store locations
- loan products
- payment schedules and fee’s
- custom underwriting needs
Besides meeting customers’ needs, you must also look for a payday loan management system that you can customize to suit your business model. As an alternative credit lender, you probably have a slew of products you offer.
With so many facets that require a personalized approach, you’ll need a solution whose payday loan management capabilities are versatile enough to handle it all.
Reporting and Analytics
As a business owner, you probably find it challenging to stay on top of your cash flow. You likely also struggle to generate reports that help you gauge how your business is doing. The problem with both is that, without seeing the big picture, you could be making decisions that are not beneficial to your business.
That’s why an essential feature you must look for in payday loan management software is a robust data and analytics engine.
A good payday management system helps you generate statements, reports, and much more with just a few clicks of a button. In addition, it can furnish you with real-time information about your business to help you make decisions quickly.
Makes Payment Processing Easier
From payment gateways to payment terms, a good payday loan management system makes it easy for your customers to pay back their loans. On the business end of things, a sound payday loan management system helps you with:
- fast funding options
- efficient payment processing
- automatic payment rules (to keep you from making attempts on a bad account)
- list of excluded states
These are all features that help ensure your cash flow is as efficient as possible. They also make it easy for you to collect and track money owed to you.
Integrates Well with Other Business Tools
Research shows that the average organization uses about 91 tools and apps to run its day-to-day operations. While you may not necessarily use that many, you probably still have many apps in your tool stack. To help create a seamless experience for you and your clients, you need payday loan management software that integrates with your other business tools. FYI, Infinity has the most integrations in the industry and allows you to manage them all from a single dashboard.
Security and Compliance
With cyberattacks on the rise, thanks to most business processes going digital, cybersecurity laws and compliance regulations are becoming stricter. Falling afoul of these could lead to severe fines and other consequences. Unfortunately, it could also cost you your business. That’s why you must ensure your payday loan management system is secure and compliant.
How Payday Loan Management Software Works
So how does a payday loan management system help your business?
Here are a few operations of your loan business it can help with:
Acquiring a new customer is a thrill for any business. However, it involves a lot of data collection — an aspect of lending that requires spending a lot of time collecting data and vetting clients. This is one of the most strenuous parts of running a lending business. Fortunately, it’s also one of the areas payday loan management software comes in handy. A capable one will help you collect all the data you need without asking your customers to fill large piles of paperwork. As a result, the loan origination process is streamlined, making it easy for you to do everything from vetting prospects to underwriting the loans to disbursing the funds.
Faster loan origination means you’ll also need to expedite your loan servicing, and that efficiently. Unfortunately, each loan is different, and you can’t apply a one-size-fits-all approach to help you service loans faster. However, a payday loan management system allows you to treat each loan independently yet handle all calculations simultaneously. It also automatically sends out notices of upcoming payments.
Debt collection is an integral aspect of running a loan business. However, knowing when loans are due and when payments have come in is another tedious and time-consuming task you must master if you’re to run your business efficiently. Thankfully, a loan management system automates this process for you. As a result, you’ll have all the information on every account at your fingertips, enabling you to identify accounts that are owing.
Need a Payday Loan Management System?
If you’re running a lending business on legacy systems, you’re leaving money on the table — lots of it. Especially if you offer payday loans as one of your products, you must invest in payday loan management software. If you want to know what Infinity brings to the table in this regard, go ahead and schedule a demo today.