Having a single end-to-end solution to manage your real estate operations is essential when striving for accurate data and faster turnarounds, but what about debt management? Whether you’re a borrower or lender, there are multiple aspects of debt to manage. Key processes include calculating amortisation schedules for simple and complex loans, tracking collateral and managing critical dates and covenants. Borrowers need to track debt against real estate collateral and account for loans by paying lenders through invoices or journalising transactions. When done manually, these processes are time-consuming and prone to error. It’s also inefficient and risky to access information from multiple systems and databases.
Here are five best practices that will help you to streamline debt management using an end-to-end real estate solution.
Eliminate Spreadsheets and Disparate Systems
Whether your interests are in managing loan information or debt investments, it’s critical to gain transparency from the investor to the borrower. You need to closely track debt from the borrower along with key deliverables and covenants with lenders.
Going paperless and using a system that centralises all loan data and provides accurate information is the first step for creating greater efficiency. By moving away from manual processes, you gain transparency, mitigate risk and increase efficiency through automation. With a debt management solution, you can centralise tracking of all loan terms in a single system, reduce manual errors and ensure data accuracy.
Gain Visibility into Critical Dates
A key component for clients with debt investments is visibility into critical dates, such as when things are due to be received by the borrower and meeting compliance for key financial covenants. This capability mitigates risk by ensuring deliverables are sent to lenders on time, tracks collateral and critical dates with notifications.
With a single platform that centralises all debt information, you can provide access to internal stakeholders for the entire loan investment portfolio. You also get deep insight into key metrics and can monitor the status of compliance with all covenants.
Automate Accounting and Reporting
For debt investments, you need complete insight and the ability to automate transactions from the borrower through the investment structures to investors. A single software platform can deliver that for you, as well as enable you to track, account for and accurately calculate all types of investment loans and structures: interest-only, principal and interest, draw loans, revolvers, letters of credit, inter-company, syndicated loans and more. You can also streamline financial consolidations, partner transfers, fund rebalancing, allocations and other processes.
For lenders with debt funds, syndications, or other debt investments, whether servicing themselves or using a third-party servicer, a built-in solution will provide full insight into the performance of this asset class and can automate accounting through the investments to investors. For those lender clients servicing their own loans, you can facilitate collections and secure automation of receipts.
An end-to-end property management and accounting platform enables you to deliver timely and accurate reporting for all ownership structures. You can easily manage the complexities associated with numerous entities and levels between investors, investments and assets.
With a cloud-based debt management platform, borrowers can automate payments to lenders and gain full visibility and audit trails into payment history. You can easily review historical and outstanding charges and the principal balance of every loan drilldown into transaction details. Having built-in accounting with every level of the ownership hierarchy provides efficiency. Debt investors can automate transactions from the borrower through the investment structures to the investors.
In addition to calculating principal and interested, a single debt management platform will also track funded and unfunded reserves and amortisation of fees, as well as payment of necessary taxes and insurance at the collateral level in certain regions.
For client lenders servicing their own loans, an end-to-end platform can automate borrower billing and increase visibility for internal stakeholders by tracking collateral and critical dates. If you have debt as an investment, you can easily manage and service your debt, including billing borrowers and managing capital through the ownership structure.
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Learn more about how an end-to-end cloud-based solution can optimise debt management through centralising data, automating processes, increasing visibility and reducing risk.