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What is Debt Management Software?

Debt management software can assist finance teams operate more efficiently, collaborate more effectively, and make more informed decisions on outstanding and future debt obligations.

When it comes to public finance, it’s more important than ever to help teams collaborate effectively and make more informed decisions. Unfortunately, spreadsheets and outdated legacy systems make this difficult to do. Today, we’re exploring debt management software and how it can help public finance teams eliminate inefficiencies, wasted time, and human error.

Defining Debt Management Software

Debt management encompasses everything an organization must do to maintain, build, and protect one of its most precious resources: its ability to borrow money to fund future capital needs. This may include making payments on existing debt; budgeting and cash flow forecasting; complying with continuing disclosure and reporting obligations; generating accurate reports, journal entries, and year-end financial statements; and tracking future debt service obligations across multiple funds, functions, and projects. 

Each step is critical to help the organization manage its capital effectively and sustainably. To do all this well, organizations need a centralized, secure, and up-to-date data source that can be accessed by internal team members and outside partners and advisors.
Debt management software empowers everyone who touches some aspect of an organization’s debt portfolio to perform their specific function with greater ease and confidence, enabling them to save time, reduce errors, and make informed decisions.

As opposed to the typical tools finance teams have historically used to manage their debt—such as spreadsheets—debt management software is tailored to meet a finance team’s specific needs, pain points, and challenges. With the efficiency and insights generated by a tailored debt management software solution, finance teams can expedite financial reporting and access better data to improve their budgets, board decisions, rate- and fee-setting processes, and financial planning for future projects.

Debt management software is powerful in its ability to streamline existing workflows and create new opportunities to drive organizational impact.

Benefits of Using Debt Management Software

Debt management software helps teams manage principal and interest on debt more efficiently, allowing team members to focus on activities that may reduce operational costs, likely producing returns far beyond the cost of software. For example, if a team had more time to identify, evaluate, and implement creative ways to shorten the repayment term of a 20-year, $10 million financing by just two years, it could generate more than $600,000 in cash flow savings—a massive budgetary boost for organizations asked to do more with less every year.

Apart from the potential cost savings, there are several other benefits that debt management software may provide for finance teams and the professionals who serve them, including:

Centralized and Streamlined Internal Processes

Debt management has long been a disjointed, manual process that relies on numerous and often conflicting spreadsheets maintained by multiple internal and external parties. Debt management software enables you to centralize all your data and automate many of your tasks, streamlining the process and empowering internal team members and external collaborators to do their work faster and more efficiently.

Improved Accuracy and Confidence in the Data

Nearly 90 percent of spreadsheets contain at least one error, which can have costly repercussions. In one infamous case, investment banking company JP Morgan Chase lost $6.2 billion, partly due to an Excel error in which an employee trying to accelerate the review process mistakenly used the sum instead of an average during a data transfer between spreadsheets.

Poor data accessibility—coupled with human error—can expose your organization to the risk of non-compliance, impede timely decision-making, and take up time that could be used on more valuable activities. Debt management software builds confidence in the underlying data by automating those manual processes, providing accessibility to the team, and creating a single source of truth.

Easy and Effective Collaboration 

When working with various internal and external team members, you will likely encounter process, data, and even people silos. Especially during audits, there may be confusion about the location and source of the most up-to-date data, miscommunication among team members, and multiple phone calls and emails required to track down, scrub, and refine the required data sets. These tasks slow your workflow, create room for mistakes, and increase costs. 

With cloud-based debt management software, your whole team can access the most current data and get real-time feedback from external partners at any time, anywhere. The result? Increased efficiency, collaboration, and alignment that you can apply to one of your organization’s largest expenditures each year.

Ability to Generate Actionable Reports 

Debt management software allows finance teams to generate accurate, up-to-date reports with ease, streamlining mundane tasks like compiling information for Annual Comprehensive Financial Reports (ACFR). Debt management software functionality, such as seamless reminders, customizable reports, and powerful charting and graphic capabilities, helps your team easily manage debt, giving them more time to focus on higher-value, strategic activities.

Challenges Addressed by Debt Management Software

Public sector organizations face unprecedented changes and challenges as they struggle to maintain tactical and strategic effectiveness. If one or more of the following indicators rings true, you should consider acquiring debt management software.

The team has limited access to data and documents.  

Traditionally, only a handful of people on a finance team have access to important debt information. If, for instance, someone outside that circle requests information, that person must defer to someone with access, creating backlogs and additional work. 

Team members don’t have enough bandwidth to focus on high-value work.  

The manual work of debt management can leave little time for thoughtful, focused efforts that add valuable impact to an organization and the community it serves. When that manual work is streamlined, however, the potential impact is profound.

There are errors in your reporting. 

Manual, archaic processes leave ample room for error, impacting everything from reporting to an organization’s ability to finance new projects. Errors are not a reflection of the team, but rather of the processes that leave room for inadvertent and sometimes costly mistakes. Debt management software offers an easy and effective solution.

Choosing a Debt Management Solution

A “fintech stack” refers to a group of solutions used together to ensure smooth financial operations. Payroll software, enterprise resource planning (ERP) software, tax management systems, budget software, and accounting programs fit into this stack. Debt management software is just one piece of the stack, keeping finance teams on task and on time. 

Implementing the proper technology can eliminate tedious, time-consuming, and manual tasks to free up personnel to focus on more high-value work. Technology can also help attract new talent, as many younger professionals want to leverage the latest tech.

Look for the following types of features when evaluating debt management software:

  • Cloud-based functionality with unlimited users
  • An intuitive, easy-to-use interface
  • The ability to track and manipulate debt obligations across multiple categories, filters, and allocations
  • A consolidated calendar reminder functionality to track payment dates, redemption dates, disclosure requirements, tax and rebate compliance, and other items your team deems necessary
  • Robust document storage
  • Collaboration functionality and the ability to provide access to your internal and external team members
  • Dashboards, reporting, automated journal entries, and year-end audit note disclosures
  • Continuous product development tailored to meet the needs and challenges of the finance team
  • Data security and measures to protect against cybercriminals

In a post-pandemic, digital-first reality, it’s more important than ever to have up-to-date technology when it comes to finance. Investing in the proper tools will mean a smoother overall experience, and debt management software has become an essential part of any organization’s fintech toolbox.

Ready to Overcome the Challenges of Debt Management? 

Traditional debt management practices are filled with numerous inefficiencies, resulting in wasted time that could be spent on more strategic tasks. Schedule a demo today to explore how debt management software can generate efficiencies across your organization.

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Disclaimer: DebtBook does not provide professional services or advice. DebtBook has prepared these materials for general informational and educational purposes, which means we have not tailored the information to your specific circumstances. Please consult your professional advisors before taking action based on any information in these materials. Any use of this information is solely at your own risk.

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