The Lender's Dilemma: Delayed payment and cashflow issues in lending

Raj Achariya, Growth Manager at Monoova, shares his insights on how B2C and B2B lenders can benefit from real-time payment processes to elevate their own operational efficiencies and drive increased customer satisfaction.

In the fast-paced world of lending cash flow is king. Prompt payment collection improves cash flow, which can lead to increased revenue. Your ability to operate smoothly and grow your business depends on the repayments from your borrowers. But what happens when those payments are delayed?

You know it all too well – delayed payments can disrupt your financial rhythm and cause additional workload in administration. Whether you're a traditional or a fintech lender, personal or business offering car loans, pay advance or equipment finance the issue of collection and management are much the same.

Payments are delayed for various reasons: administrative errors, insufficient funds, or the sluggish pace of traditional payment methods. So, what's the solution?

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Real-Time Payments: Your Game Changer

Enter real-time payments: Osko, PayTo and PayID are game changers in the lending landscape. The real magic is in their speed – unlike traditional methods that can take days to process, real-time payments are completed almost instantly.

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Fast, transparent repayments with PayTo

PayTo is the new real-time payment system that enables lenders to debit, in real-time from their customer's account. Payment schedules are easily and electronically established with your customers directly in their own online or mobile banking app.

PayTo comes with additional features and security that traditional direct debits do not facilitate:

Instant authentication – because agreements are made and verified digitally through your borrower's own bank, you will always know that you have the correct details for repayments.

Failed payment – in the case of insufficient funds, you will receive an instant notification that the debit cannot be made, allowing you to promptly inform the borrower and make arrangements for them to deposit funds or make an alternative payment.

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Instant payouts with PayID and Osko

Paying out in almost near real-time gives your customers the best lending experience possible. Often funds from loans are required quickly. Funds transferred with Osko are received in near real-time. When used with PayID the payment process is simplified by allowing borrowers to use easily memorable identifiers, such as email addresses or phone numbers, instead of complex bank account details. A win-win for both lenders and borrowers.

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What about BECS, direct debit?

Over the years BECS direct entry payments, such as direct debits and direct credits, have been one of the key elements of the Australian payments infrastructure. BECS remains a valid payment method, which is why Monoova continues to support BECS.

However, the RBA confirmed in the June 23, Strategic Plan for Australia’s Payments System, that in 2024 they will start initiate the move of BECS users to the NPP.  

It’s likely that the transition and slow phase out of BECS will take a number of years, but it is coming. For a smooth shift, with minimal disruption, a switch to a single payment provider, with access to all Australian payment rails could be a smart move for lenders.

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Automated Reconciliation: Your Efficiency Booster

But there's more to the story! Real-time payments are the heroes, but they're even mightier when combined with automated reconciliation.

Matching incoming payments with the right loan accounts, ensuring that every payment finds its home can be arduous and take up valuable resources. Manual reconciliation is time-consuming and error-prone, making it a less-than-ideal choice for lenders dealing with substantial transaction volumes.

Automated reconciliation, on the other hand, uses technology to streamline this process. It means fewer errors and more time and resources at your disposal. Efficiency soars, and accurate records are maintained – a must for regulatory compliance.

With Monoova’s Automatcher you can reduce your days of reconciliation to just a few hours. With the ability to create an almost unlimited number of accounts for your borrowers, Automatcher can instantly allocate the correct repayment to the correct account. Significantly less resources are required, errors and orphaned payments reduced to minimal, and hours of administration time resolved.

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Why Partner with Monoova?

• First to  Deliver PayTo at Scale: Monoova have the experience and expertise that can handle your large transaction volumes.
• All-in-one API: Through Monoova’s best of breed API, you can access all Australian payment rails and automated payment solutions. One provider, one API.
• Transition Smoothly to Modern Payment Rails: With Monoova modernising your payment is simple. Because we offer access to all Australian payment rails, you can accept traditional methods of payment and transition to the new.
• Our Service Sets Us Apart - Monoova's Dedicated, Local Support Team is legendary for its exceptional service. With Monoova, you'll have a partner who's always there to guide you through implementation and provide ongoing support whenever you need it.

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Want to learn more? Connect with Raj on our payment solutions.

‍_{Monoova Payments Pty Ltd (ABN 38 126 015 227) trading as Monoova (“Monoova”) is the authorised representative of Monoova Global Payments Pty Ltd (ABN 77 106 249 852; AFSL No. 421414 ), the issuer of the Combined Financial Services Guide & Product Disclosure Statement Non-Cash Payment Products and Services dated 20 September 2023. (FSG/PDS). This information is given in summary form and does not purport to be complete. To the maximum extent permitted by law, Monoova does not assume responsibility for, the content, accuracy or completeness of the information presented. Before acting on any information you should consider the appropriateness of the information having regard to these matters and seek independent legal, financial and tax advice. To the extent that the information contained above is sourced from third parties or provides link to third party websites, Monoova takes no responsibility for the accuracy, currency, reliability and correctness of any information included in the material provided by third parties nor for the accuracy, currency, reliability and correctness of links or references to information sources (including internet sites) operated by third parties. To the extent that the information contained above is sourced from third parties or provides link to third party websites, Monoova takes no responsibility for the accuracy, currency, reliability and correctness of any information included in the material provided by third parties nor for the accuracy, currency, reliability and correctness of links or references to information sources (including internet sites) operated by third parties}