Sopra Banking Software Saves Private & Commercial Finance Group £500,000+ a Year in Collections Costs & Contributes to a Five-Fold Increase in Revenues from Existing Customers. Thanks to automated processes and clear performance visibility, the London-based car and equipment finance business is able to make smarter decisions and service a growing business with eight fewer collections agents

London-based Private & Commercial Finance Group plc (PCF) provides finance for vehicles, plant and equipment. It operates through two divisions – Consumer Finance which finances cars for consumers, and Business Finance which finances vehicles, plant and equipment for businesses.

Over the last 20 years PCF has grown both organically and through a series of acquisitions. Today it has a finance portfolio of over £100 million and almost 14,000 customers, and employs over 40 staff at its offices near London Bridge.
PCF’s performance is impressive given the difficult environment it is operating in, which has seen other finance organisations exit the market. The group has achieved this by continually refining its strategy and harnessing the latest technology to help it closely monitor and focus its operations.

Knowledge is power
In 2009 PCF implemented Sopra Banking Software’s Sopra Banking Suite for Asset Finance solution, to give the organisation greater visibility and control over its credit control activities. Although the group already had an asset finance management system, this was now as old as its business. “We were using an old DOS-based system which had limited functionality for collections and was very weak on reporting,” explains Andrew Barber, information systems manager at PCF. “Getting bespoke management information out of the system was very difficult.”

As the UK continued to dip in and out of recession PCF wanted to be able to concentrate its resources more productively, both within its credit control operations and in other areas of the business. “We had limited automation in our collection processes and were keen to improve on this when choosing a new contract administration package,” Andrew says. “We wanted to establish more of a workflow-based environment, to gain a greater level of control of the performance of our portfolio at any stage in the month. This would allow us to react accordingly, and focus on the important agreements.”

Targeted marketing
PCF also wanted to provide management information from collections to the business development team. Although traditionally the vast majority of the group’s business originates through brokers, PCF has an opportunity to sell further finance to existing customers as their contracts come up for renewal. As the business approached its twentieth anniversary, it set itself a goal to maximise this repeat revenue stream and recently appointed a sales and marketing director to help grow the direct sales business.

This strategy also demanded stronger management information. “With a large portfolio of customers we weren’t in a position to remarket our databases effectively if we couldn’t determine who the good customers are,” Andrew notes.
Flexible control
In a new credit and collections solution PCF wanted a workflow-driven system that would provide a high level of process automation – yet with the flexibility to enable internal teams to amend parameters, and incorporate new products into the system, without having to go back to the software vendor. Ad-hoc, custom reporting capabilities were critical too, so that teams would be able to monitor accounts and quickly identify potential payment problems – and, at the other extreme, repeat business opportunities.

PCF approached eight software vendors, reducing these to a shortlist of four companies. After a rigorous proof-of-concept exercise it found Sopra Banking Softwares solution was the closest match to its needs. The group had a choice of buying the software and managing it internally, or procuring the functionality as a remotely hosted service, managed by Sopra Banking Software. It chose the former option.

“The Sopra Banking Software platform is very easy to use, and extremely configurable,” Andrew comments. “We had some excellent training and were involved in the initial set-up of the system, so the knowledge transfer was very good. We can set up new products on the system and amend system configuration easily. If there is a more significant change we want, we can submit a change request online through a dedicated customer portal.”

Doing more with less
Since using the software, PCF has been able to handle its credit collections activities with almost 50% less staff. Before the solution was deployed the credit control team was 20-strong; within two years the group had been able to reduce this number by eight. Agent effort is now better targeted; the quality of the portfolio has improved, reducing the level of chasing that is required; and routine processes such as account alerts and follow-up actions are managed automatically.
“We can set the system so that if an account goes into arrears a letter is sent out after two days and, if the situation persists, a stronger letter is issued a few days later,” Andrew explains. “Previously, a lot of this was done manually. Now it is all automated but we have full control over the parameters and can adapt them any time.”

End-to-end efficiency gains
Another advantage of the Sopra Banking Software platform is the extensive range of interfaces it provides to other systems, allowing end-to-end workflow and automation across related business processes. This further amplifies the efficiency and productivity gains. One of these options is an SMS facility, allowing the credit control team to issue automated text prompts to customers in arrears. “There are regulations about what you can say in an SMS message, so being able to control this automatically is very useful,” Andrew notes.

Other interfaces let staff process credit or debit card payments from within the system. Again this speeds up the process because the team don’t have to go into a separate system to complete transactions. The same applies to address verification, and validating bank details, Andrew adds. “The result is a very slick end-to-end process.”

Write-offs reduced by £500,000 a year
PCF has calculated that it is now achieving £500,000 savings annually from reduced write-offs, because the new system is so efficient in recouping missed payments at an early stage. This also means the group can run the credit control function with eight fewer staff.

Even simple processes such as setting and managing fees associated with reminder letters or bounced direct debit payments can be managed more successfully now, contributing to collections and providing greater visibility of this activity to the wider business. Processing of asset disposal is also much more efficient.

“Sopra Banking Software’s platform is a very stable system which helps with a whole range of day-to-day activities,” Andrew says. “Payment plans are another area where it is very powerful. If a customer is £300 in arrears and we agree to a payback rate of £50 a week, previously we had no easy way of ensuring that they stuck to this plan. Now we have automatic alerts and reports, prompting action.”

Eliminating spreadsheets and the manual processes associated with data input, meanwhile, has generated a further £4,000 a year in savings for PCF, he estimates.

Repeat business grows five-fold
Repeat business has soared too. In the month of May 2010, before using the Sopra Banking Software solution for account analysis, PCF financed just £74,000 in repeat business. In February 2013, a short month, the equivalent business generated was £370,000 – a five-fold increase. “Without this software, we wouldn’t be capturing the information about which customers to target and canvas,” Andrew says. Now, however, PCF can target responsible customers with promotions and offer incentives for friends and family.
The group’s latest enhancement to the platform, which Sopra Banking Software has implemented at PCF’s request, is a facility to intelligently handle penalty interest payments. “This had been a very manual process for our legal department, often taking months to process,” Andrew explains. “The system can calculate the penalty interest on a monthly basis as required, improving speed and accuracy. We have done a lot of work in this area, and on bad debt provisioning and capital allowances.”

Compliance control
Among the value-added services provided by Sopra Banking Software in support of the solution, PCF particularly appreciates the help it receives in the area of compliance. “This is very important to us given all of the consumer credit regulations,” Andrew notes. “Sopra Banking Software has its own compliance department which provides us with quarterly updates on the latest requirements, so it isn’t left to us to be on top of everything. This gives us a lot of confidence. We find the company very professional, and very easy to deal with.”
Tighter controls and improved accuracy, helped by on-demand report generation, have helped PCF strengthen its underwriting and attract new funding, most recently from Barclays which has committed to supporting the group’s activities for the next three years.
Commenting on the developments, PCF’s Managing Director Robert Murray says, “The quality of our portfolio is the best it’s ever been, and this is reflected in our performance. The last two months have been our strongest yet for new business and we’re going from strength to strength in a difficult market. The visibility and control Sopra Banking Software’s platform has given us have had a large part to play in helping us achieve this.”