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Loan and Lease Software Evaluation

Guest post by: Joelle Ascher

Article Overview: With the abundance of loan and lease software choices in the market it can be somewhat difficult and daunting to know what to look for and how to narrow down the selection list. There are three important factors to consider during your evaluation. It may suprise you to learn that price should be at the bottom of the selection criteria list. Unfortunately it is often the key driving force in the selection process with potential for yielding unsatisfactory results down the road.

Loan and Lease Software Evaluation

First you should recognize that loan and lease software solutions come in very different price ranges representing entry level software or do-it-your-self packages to mid and high end software which often will include professional services such as customization and consulting. If you are a small business or startup, then you may be somewhere in the middle whereby you want a software that is not so simplistic and entry level as to limit your future business growth and potential, but at the same time fit within a budget constraint. Typically, the lower the price tag, the more generic and general general purpose the software is as well as having fewer or restricted service and support options, like email or online support versus working directly with a project manager, for example.

A good starting point is to focus on your finance sector, business needs and price and in that order.

Your finance sector

The type of asset or assets that your business offers to finance either as a loan or lease option will have a significant impact on the software that you ultimately select for your business. Furthermore, the more types of assets financed, the more diversity and flexibility is required from the software. If your finance business is limited to one type of asset, for example, like automotive, then look for software that can address the particularities of that asset class.

An example of how asset type can dictate software needs is to compare a vehicle asset to a technology asset. When tracking the financed vehicle, specifics such as year, make, model and identification number are important to uniquely identify the asset. There often can be additional identifiers such as tracker devices and options. For a technology asset the quantity, bundled options and serial number are important. Technology assets may also include recurring service and support plans to be added to the finance cost. Many software will usestandard or user defined fields to allow you to adapt to various asset types and this approach can lead to compromises or workarounds down the road. So know what attributes you want to track for the assets you finance and ensure the software can accommodate them in the way that is needed.

Again depending on the finance sector, additional requirements such as broker or dealer programs that are common to the industry and can include fees, commissions, holdbacks, payouts, reserves etc. Again, if your finance business incorporates both the customer financing and servicing side as well as the origination and cost tracking side, then ensure that the software can effectively manage both.

Your business needs

Even within the same sector, every business has different work flows, rules, procedures, policies and strategies which make them unique. Often times one or more of these attributesisa keycompetitive advantage in the market. Acquiring a loan or lease software means that no part of your business should be compromised to "fit" the software, but rather, the software needs to adapt to the way the finance company is intended to be run.

In my experience, there are never two companies alike, even when they are in the same business. Often these differences emerge when you start to drill down to the details. Again, using the automotive sector as an example, two finance companies may offer car leasing and have similar dealer programs, yet the way in which the dealer incentives and payouts are structured can differ. This is a key detail not to be overlooked - you certainly wouldn't want to change your incentive programs just to suit the software?

When evaluating software, detail is king. A software demo should provide you with a very good overview of the basic functionalities, screen design, ease of use,overall quality of the software and even provide some insight into the vendor's knowledge and expertise. However,it is not enough to base a decision on. At best, it will serve to narrow down the choicesfor best fit insoftware and vendor selection.

Once you have narrowed down theoptions based on a demo and discussions with the vendor, and wish to persue a particular software solution, make sure that your business needs are documented in detail and that you know and understand all of the specifics of how the software will address every aspect of your finance business. If a particular vendor is not able (or willing) to put into writing the exact software specifications relating to your business needs, then be wary. That is often the first signal that there is no interest to delve into the details, since this will undoubtedly uncover weaknesses or deficiencies that the vendor does not want to highlight.

Price

Price and budget should be the least important of all considerations that will help you to make a decision. Putting price at the top of your priority list often means that price is more important than yourbusiness needs,a sure recipe for failure. You can always find a software in your price range, but if it doesn't meet your business requirements, then it is a poor investment as well as a wasted effort. When you evaluate the software selection based solely on price, you are putting at risk the future return and value that the software solution should provide. Sometimes, this is a deliberate decision with the thinking that this loan or lease software selection is only for the short term, and later on it can be upgraded or even discarded, since it didn't cost that much. This thinking is flawed however, since often business owners don't consider the implications of having to restart or upgrade at a future time when the business has sustained more growth, which will have much greater internal costs in time and resources. There are many ways to respect your budget constraint yet still purchasefor the future by starting small, limiting modules and add-ons and even financing the software itself.

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Article Tags: lease lease software, loan software, software evaluation, software selection



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