From the get-go, many private lenders use Microsoft Excel as the software solution for tracking all aspects of their businesses. That’s really not surprising, given its familiarity and versatility.
It is a well-known tool among employees and is feature-rich, allowing you to manage customer data, create formulas for quick calculations, and keep all your information in one spot.
It’s not that simple.
Whether you are just starting out as a private lender or run a well-established business, you might want to look at solutions that can help you scale your growth even better.
Here are three reasons to consider switching from Excel to a proper Loan Origination System software platform.
Common Excel Drawbacks
Lack of team collaboration and sharing capabilities. Excel has limited ability for private lending teams to collaborate. Of course, users can email an Excel file back and forth, make changes, save the file and resend it, but no real-time collaboration functionality is available. You cannot have more than one team member in the file at the same time. The content of the file can become outdated, and team members may get confused about which version is the most recent. Additionally, it becomes difficult to divvy up leads and clients when you’re working in Excel, as there can be overlapping messaging and missed lead opportunities.
As difficult as Excel spreadsheets are to share internally, they are too easy to share externally. As opposed to a secure software that requires users to log in to gain access and only allows certain members to view full client information, Excel spreadsheets can generally be circulated to anyone via email. Remember, as a private lender, you typically store client and deal information in these Excel spreadsheets. You don’t want to leave your entire pipeline and leads list open for misuse.
Manual data entry invites errors. Data must be entered manually in Excel. Entering and updating customer data can be time-consuming, and it opens the door to human error. And, as we all know, human error can lead to costly mistakes. In 2012, JPMorgan lost more than $6 billion in what’s known as the “London Whale” incident caused by Excel spreadsheet errors. In that case, an employee copied and pasted data from one Excel sheet to another, introducing errors that were not caught until it was too late.
Scalability. As your business and client lists grow, your Excel spreadsheets get bigger. However, the larger the spreadsheet, the more likely it is to contain errors.
In addition, as you expand your team, more people will need to share the information in the spreadsheets. Remember, Excel does not allow real-time collaboration.
Similarly, the larger your client base, the more data you are tracking in your spreadsheet. You may have already been frustrated by the experience of wading through hundreds or thousands of client notes to track and follow up with these clients. Overlooking important notes and other data can lead to missed opportunities and dead files.
More Robust Solutions
You might have heard the expression “What got you here, won’t get you there.” Whether you are just starting out or have been running your private lending business for years on just Excel, you might want to consider whether it’s really getting the job done for you.
There are many Loan Origination System and CRM software solutions and platforms available to the private lending industry. Many of them allow you to take care of virtually everything in your business operations, thus streamlining the entire private lending process, from intake to closing.
As you begin considering various replacement systems for Excel, determine which of a system’s features are crucial for your business to succeed in the long run. Here are a few important features to think about:
Cost and implementation. When you purchase any software, you need to view it as investing in your business. The upfront pricing and subscription fees will be offset by improvements in efficiency, productivity, and organization. Compare the software solutions, and make sure the cost of the service not only fits your budget but also matches the size of your team and workflow. Keep an eye on the differences between the number of users and features to ensure you’re getting the most for your team for a reasonable price. You don’t want to be spending money on features your company will never fully use.
In addition to startup and subscription costs for the software, consider the cost of implementation and training. New software solutions always come with a learning curve. Before purchasing new software, understand the implementation, onboarding and training costs, and timelines. Spending months learning a new software, even for the right price, can slow your business to a grinding halt, and that may not be worth the time necessary for onboarding your team.
Cloud-based and integration options. Cloud-based software applications make life and business much easier, because everything is accessible to the entire team. Instead of storing each document on different computer desktops, the documents are stored in the software itself, enabling multiple people to work on the same loan file, share documents, client information, and lending terms all in the same platform.
Additionally, keep an eye on which of the software providers makes their Application Programming Interface (API) public. The API allows you to expand your possibilities to integrate with service providers, marketing platforms and others. Ask about (1) the current providers each software solution is partnered with and (2) the process of integrating with any partners your business is working with. Consider credit and background solutions, appraisal management companies, referral marketplaces, and others.
Integrating disjointed software solutions is one of the most common challenges businesses face. Most applications are not connected with each other, resulting in little islands of data not easily accessible to team members. Being able to share lead and client data among applications streamlines your workflow.
Data security. Beyond cost and implementation, data security is the most important factor to consider when shopping for a new software solution. To understand how your proprietary information is protected in the software, ask these questions:
- How is client information protected?
- Who has access to clients and loan files?
- Who can upload information and documents into the system?
- Can my clients log in to the system, and what can they see and do?
Loan Origination Systems and CRMs are designed to protect your information. Using software that requires users to log in with their specific email and password adds an extra layer of security to your valuable client, lead, and sales data. Many software solutions also enable you to set permissions for what each user can view and modify within the system. And if an employee leaves your company, it’s not a problem. You simply deactivate that person as a user, transfer their pipeline to your other team members, and know that your data is secure.
When it comes to running your private lending business, traditional Excel spreadsheets can seem like a good solution. Upon scrutiny, however, Excel has a lot of shortcomings.
If you’re struggling to operate within the confines of Excel spreadsheets, it may be time for an upgrade. Loan Origination Systems and CRM software solutions offer a better way to manage client data, lead lists, and pipelines. They also make it much easier to share data across teams and applications in a secure, easily accessible format.