3. Loan servicing workflows
Most of the day-to-day work sits here. Routine servicing workflows repeat across the portfolio, forming the backbone of loan servicing workflows from payment posting through loan closure. Then there are exceptions, including a borrower request to change a payment date. A fee may also need a supervisor's sign-off, while some payments arrive without a reference number. Both the routine and the exceptions need somewhere to live that isn't a shared spreadsheet.
Configurable routing and clear task ownership make handling measurable through alerts and service-level controls. When loan servicing workflows carry ownership and deadlines, work stops falling between people. This is post-origination administration, so keep credit decisions and application processing out of it. The question is whether an approved loan gets serviced consistently.
4. Arrears tracking
The loan management system software should immediately identify missed or partial payments and apply the appropriate delinquency status based on days past due. Portfolio at Risk is the most widely accepted measure of portfolio quality, and the same guidance warns that any PAR30 above 10% should worry an MFI, because most microcredits carry no bankable collateral.
Good arrears tracking gives teams account-level histories that show aging and promises to pay, then alerts them before a two-day slip becomes a ninety-day problem. Timely data helps teams prioritize the accounts worth chasing first. A dashboard matters when it feeds a decision about who to contact and when.
5. Collections management
Once an account is past due, collections needs structure. Each account needs one record of its collections history so the next person to touch it knows exactly what happened before. The record follows the case from assignment through its outcome, with each contact and commitment recorded.
Segmenting accounts sharpens the effort, and the system should let you split them by:
-
Risk level and delinquency stage
-
Outstanding balance or product type
-
Borrower circumstances that call for a different approach
Every team works the same accounts, so the platform has to support compliant, respectful contact across every channel. Under the CFPB's Regulation F, collectors face a seven-calls-in-seven-days limit per debt, and email outreach must carry an easy opt-out. A complete treatment history keeps those rules enforceable.
6. Restructuring and refinancing
When a lender agrees to change terms, the loan management system software has to execute the change without erasing what came before. The original agreement and the complete history of transactions and audits survive. That covers rescheduling and payment holidays. Revised rates or tenors also require support. Refinancing an old loan into a new facility requires recalculation of every future obligation the change touches.
Accounting makes this unavoidable. Under IFRS 9, a modification that leaves the asset recognized adjusts the gross carrying amount of the asset, and the standard's PAR definition folds restructured loans back into the risk numerator. The system records and executes an approved decision, while the lender and its risk committee retain authority over credit policy and restructure approval.
