For lenders, offering credit can be the easy part of the job, with effective collections on repayments the ever-stressful opposite. However, automation through a partner such as Modulr can offer a host of benefits, from simply keeping repayments on time to generating the insights to power strategic decisions.

Modulr makes collections easy by giving borrowers and lenders flexibility and choice. By making automation integral to repayments, lenders can ensure that funds are accurately and swiftly transferred and reflected against the borrower's loan. That means quicker repayments, streamlined collection fund flows and improvements across operational efficiency, customer experience and risk management.

In this blog, we’ll explore how to:

1. Power collection flows through tailored automation

2. Integrate through APIs to enhance the customer experience

3. Tap into specific benefits as a B2B or B2C lender

Power collection flows through tailored automation

Automation of collections doesn’t need to be complex, and it can massively simplify lenders’ manual workloads. Alongside the obvious improvements in operational efficiency, Modulr’s automation solutions also reduce borrowers’ risks of default and offer a seamless experience that has a powerful impact on their satisfaction.

Powerful, flexible, instant payments

• Multiple pay-in options: An obvious way to reduce default risk is to make pay-ins simple. Modulr’s platform supports automated Open Banking Payment Initiation Services and a wide range of push and pull payment methods, including Bacs, SWIFT, Direct Debit, CHAPS and Faster Payments in the UK, as well as SEPA Credit Transfer and SEPA Instant across Europe.
  
  
• Maximise the collection opportunity: Modulr allows the creation of unlimited virtual accounts, which lenders can use to make collections as easy as possible. By creating specific accounts per loan agreement, and automating both push payments into them and notifications of payments they receive, lenders can create a clear, closed system for each loan. This can hugely save on administration and reconciliation time and gain valuable data to inform future lending.
  
  
• Direct access to instant payments: With Modulr’s direct access to Faster Payments and connection to SEPA Instant, loans can be disbursed – and collected – in GBP and EUR 24/7. This makes cashflow and reconciliation easier for lenders dealing with thousands of accounts. 

Seamless reconciliation

• Integrate to automate: Modulr allows lenders to integrate Bacs Direct Debit collection services directly into their loan management systems, enabling automatic repayment matching, removing manual intervention and greatly reducing administrative costs and the chance of errors.
  
  
• Reduce administration: By using specific unique accounts for each borrower, lenders can manage and reconcile their customers’ push repayments securely and easily. This eliminates the need for complex transaction references and error-prone manual inputs.
  
  
• Custom collection models: Innovative lending models such as flexible instalment loans, invoice finance, merchant revenue finance and many others can use Modulr’s comprehensive suite of payment methods and instant issue accounts to custom-build automatically reconciling collection flows that reflect the unique needs of their business.
  
  What’s more, those flows can flex to each specific use case, recognising early repayments, for instance, and leveraging the most appropriate payment method to get the best result for the borrower and the lender.

Reduced risk of defaults and fraud

• Confirmation of Payee: Modulr’s Confirmation of Payee service helps to prevent fraud and errors by ensuring payments are sent to the account holder that applied for the loan. This provides wider covering than other bank account verification methods, and further reduces the likelihood of payment errors and fraud, protecting both the lender’s and borrower’s interests.
  
  
• Insights and real-time notifications: Webhook-driven notifications mean lenders receive specific, real-time updates on payment flows, providing better visibility and control over collections and ensuring that borrowers are not chased unnecessarily for completed repayments. This immediate feedback helps accelerate repayment cycles, manage cash flow more effectively, anticipate potential issues, and make informed decisions that optimize your lending strategy.
  
  

Integrate through APIs to enhance customer experience

Borrowers value choice and control. Modulr allows lenders to offer their borrowers their choice of preferred repayment method, fostering empowerment and building trust. Meanwhile, features like delayed payments enable borrowers to manage their finances effectively and make informed repayment decisions.

Lenders can integrate a robust API like Modulr’s by integrating payments into their existing loan management system, and lean heavily into the benefits of a seamless customer experience and accurately presented data.

Seamless integration

• API flexibility: Modulr’s robust API allows lenders to integrate payment functionalities directly into their existing loan management systems. This seamless integration reduces disruption and provides a smooth experience for both lenders and borrowers.
  
  
• Embedded experience: Modulr sits behind the scenes allowing lenders to leverage huge capabilities through an API while designing their own unique customer experience.

Operational efficiency

• Reduced administrative burden: Automation of payment collection and reconciliation processes minimises manual work, allowing lenders to focus on core lending activities. This efficiency translates into cost savings and operational improvements.
  
  
• Enhanced tracking: Modulr’s comprehensive tracking and reporting capabilities mean lenders can easily monitor payment flows, manage disputes, and generate reports, contributing to more effective decision-making.
  
  

Benefit from automated pay-ins for B2B and B2C lenders

By automating payment flows, Modulr empowers lenders to focus on what matters most – creating value and fostering strong relationships with their borrowers. With reduced operational burdens, improved efficiency, and a superior customer experience, Modulr helps you unlock the full potential of your lending business.

B2B lending

• Revenue Collection: For revenue-based financing providers, Modulr’s automated split functionality enables the segregation of pay-ins as they arrive. Each customer has a dedicated settlement account, simplifying revenue management and accelerating debt resolution.
  
  
• Efficient debt collection: Directly collecting revenue from the borrower’s funding source speeds up the repayment process, enhancing cash flow and reducing the complexity of collections.

B2C lending

• Delayed payments: Modulr’s platform supports flexible repayment schedules, allowing borrowers to plan their finances more effectively. This flexibility helps borrowers make better financial decisions and reduces the likelihood of missed payments.
  
  
• Improved financial management: Automated collections and real-time notifications help borrowers stay informed about their payment obligations, contributing to better financial health and reduced default rates.

By enhancing operational efficiency, reducing default risks, and improving the customer experience, Modulr’s products provide a comprehensive approach to managing loan repayments.

The ability to integrate seamlessly with existing systems, automate processes, and capture real-time data ensures that lenders can focus on their core business while enjoying the advantages of a streamlined and efficient payment solution.

For more information on how Modulr can transform your loan collection process, visit our pay-ins product page or contact us to learn how we can help you enhance your lending operations.