ACH Processing For Subprime Lenders

Lenders, particularly those in the subprime space, need to automate their loan repayments in order to insure a reliable cash flow stream. ACH provides the ability to accomplish that, and do so at a fraction of the cost of processing credit cards and even paper checks.

The ideal situation is to utilize an industry specific, subprime lender software platform. Software vendor, Autopal Software, is one such example. Think of Autopal as a customer relationship management tool complete with the information gathering modules necessary to manage your customer base.

Detailed reporting and multi-level permission based access provide everything you need to effectively and efficiently manage your loan portfolio on a daily basis. Integrated services further enhance the software’s capabilities, improving the user experience while providing a one-stop portal for managing your business.

ACHQ.com provides one such service integration. Rather than chasing down borrowers to collect payments and running to the bank to deposit paper checks, ACHQ provides Autopal users with an integrated option to debit the consumer’s bank account.

What this really does is provide the subprime lender with control and predictable cash flow. ACH enables you to “pull” funds from your customer rather than waiting for them to initiate the transaction each month.

That’s a powerful capability and all you need to do to accomplish this is to add a simple ACH Authorization Form as part of your loan package. Well that and an ACH processor to provide the service.

When you combine the improved cash flow and the time you’ll save, along with being able to initiate the debits from within the software itself, you have a comprehensive state-of-the-art portfolio management platform.

Regardless of the accounting software or CRM you use, the process is very much the same.

We’re often asked about how the debit process works. It’s really a very simple process that is remarkably similar to processing paper checks.

When a borrower pays an installment by check, your accounts receivable clerk matches their check to their account. That information ideally comes from the payment stub they return with the check. That’s less of an occurrence these days, particularly when the consumer initiates payment through their bank’s online bill pay system which does not typically include a remittance statement.

In those circumstances when the borrower’s account number isn’t readily available, the A/R person needs to search for the account on your software. Not only is that very time consuming, it’s also prone to error.

By contrast, when an ACH debit record is created, the borrower’s account and routing number are entered into the software and stored for future payments. Once the information is verified, it’s there, no need to re-enter it. This dramatically reduces administrative errors and streamlines the processing of payments.

It’s important to note, that today’s automated debit infrastructure is flexible and intuitive. If, for example, you create a monthly debit schedule and the day you select falls on a holiday or weekend, the platform automatically appends the debit to run the next business day.

For some of you, automated may not be ideal. Automation is not a necessity to establish recurring payment processing schedules. Many of our lenders prefer to manually initiate debits. They do so through batch upload or manually posting transactions within the software interface.

For those times when a borrower cannot make a payment or their scheduled payment is returned, our ACH platform enables your staff to adjust or reschedule the amount and/or the processing date.

How are returned transactions and reporting handled? We’ll cover those in future posts, so stayed tuned..

Give us a call 877.743.1551 or visit us online @ ACHQ.com

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