Structured Finance Case StudyCreditEase paves the way for NEF to make a difference for Previously Disadvantaged Entrepreneurs.
The NEF’s Fund Management Division provides much needed access to funding for black entrepreneurs and black empowered businesses which, despite having sound and commercially viable business plans and existing business operations, have been unable to raise finance.
The Fund employs just over 50 dedicated employees responsible for processing more than 16 000 applications and whittling this down to the 200 or so actual loans granted annually.
challenge
Until recently, a large percentage of this rigorous application and selection process, as well as the management of the loans granted was handled manually. While the existing loan management system was competent; it was unable to support the Fund’s flexible repayment programmes, individually tailored to meet each enterprise’s unique circumstances. There were a number of shortcomings within the system that resulted in various business inefficiencies. These included unnecessary duplication of tasks, lack of visibility into the loan lifecycle and unavoidable human errors.
Following a rigorous business process analysis, the NEF identified several key system solutions for acquisition, including Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) and a Loan Management System (LMS), all of which would have to integrate with the existing Microsoft platform. Given that the NEF manages over R1billion in loan funding a year, the loan management solution was the key driver.
solution
The NEF considered a number of options and ultimately appointed Microsoft Gold Partner Ké Concepts, to handle the LMS. Ké Concepts worked alongside the client and its technology partners to design an intelligent loan management solution able to integrate with several Microsoft–based products including the existing Microsoft SQL Server, Microsoft Dynamics CRM 4.0 and Microsoft Dynamics GP 10.0.
“Ké Concepts displayed all the key competencies we were after and are recognised industry leaders in loan manage- ment,” says Wright. “As a locally developed solution, support and maintenance is affordable and readily acces- sible. And finally, as a Government Parastatal with a mandate to support South African entrepreneurs, it was important to us from a mission and values perspective to partner with a local organisation with excellent BEE credentials. Ké Concepts’ BEE rating in terms of owner- ship and management shows real commitment to some- thing that is key to our own business.”
results
Flexibility to better meet client needs: The NEF has a more flexible approach to financing than traditional financial institutions. This includes creating customised individual payment plans which can include moratoriums on interest, delayed payments, providing tiered interest rates and variable instalments tailored to best suit each business unique requirements.
“CreditEase definitely proved to be the most flexible in terms of these calculation variables, which suits the way we operate. After some useful customisation on the moratorium side as well as on the variations of the amortisation model, we have been able to settle the loans management side of the organisation. Because of this flexibility, CreditEase also enables us to monitor ageing more effectively despite the high level of loan tailoring and variations of moratoriums.”
Business critical peace of mind: The NEF operates in a high risk environment and errors can have far reaching effects. The CreditEase solution has been instrumental in creating the peace of mind the Fund needs to operate confidently, at ease that all loan data is accurate and up to date.
Seamless integration: As a Microsoft-centric prod- uct, CreditEase offers users a familiar interface as well as robust integration with the NEF’s Microsoft CRM Solution, which handles the loan origination and client facing activity as well as with Microsoft GP which handles the financial and enterprise resource planning elements. The two-way transfer of data across these platforms creates a valuable single 360° view of each beneficiary that is continually updated.
Meaningful reporting for decision making. Thanks in part to its seamless integration as well as its exceptional functionality; CreditEase is able to provide the NEF with multi-platform reports in real time, for informed decision making. Through this, CreditEase plays a vital role in identifying potential problem areas before they escalate into real issues and even aides in indentifying where additional non-financial investment may be required to help protect the Fund’s interest.
Allows a more ‘people-centric’ focus: The NEF goes beyond just funding enterprise and also provides additional non-financial support with a view to improve the sustainability of the projects it invests in.