European online lender October explains that they aim to effectively connect borrowers and lenders.
Lenders have the opportunity to invest their savings “usefully” and “profitably” in order to facilitate the financing of the “real economy” while companies or enterprises “find new sources of simple and efficient financing independent of banks” .
As mentioned in an October blog post, their platform allows users to support the growth of their business and increase their savings at the same time.
In an update, the October team explains that repayments are the principal and interest that lenders “get by supporting business growth plans with their savings.” The online lender adds that repayments are made regularly, “according to the amortization schedule of their loan.”
October offers amortizing loans, “for which you will receive principal and interest each month, and deferred loans, for which you will receive repayments after a period of time, such as loans guaranteed by the French state,” the company explains. .
The October team further Noted that on the 5th of each month, they order their payment provider to “debit the borrowers’ bank account for the amount of the monthly payment”.
As indicated by October, this levy is “carried out following the Single Euro Payments Area (SEPA) standards. ”According to SEPA, payment rejections can“ occur up to 5 working days after the date of the transaction. ”This is why a time limit is“ taken into account to validate the transfer, after which your account October is credited between the 15th and the 20th ”.
The October team also mentioned that the date of your next repayments can be checked from the Transaction tab in the wallet. The date “shown is indicative and there may be a difference of 1 to 2 days between the scheduled repayment date and the actual repayment date,” the company’s blog explained. He also noted that this delay may be due to a public holiday during this period or “due to an exceptional technical problem, but you will always be reimbursed before the 20th of the month”.
Each month, the October team works cooperatively to “make sure you get your refunds in your October account.” It is an organized process where all teams are responsible for carrying out certain tasks.
As stated in the blog post:
“At the start of the month, the Operations team checks whether the monthly payment has been processed successfully. This team is also responsible for recovering late payments in the event of an incident and for sharing information with the Lenders team to communicate late payments to lenders.
October also noted that during all refund processes, the operations team works with their payment service provider, The way of the lemon.
As mentioned in the update, Lemon Way is a financial entity authorized and supervised by the French financial regulator, which “manages all financial transactions on the platform”.
Lemon Way authorizes direct debits and “allocates funds to the correct borrower portfolio.” Once the funds are allocated, October will organize the repayments “by ordering a peer-to-peer transfer from the portfolios of the borrowers to the portfolios of the lenders,” the company said.
Once the operations team knows the final status of each direct debit, the lender relations team “kicks in”. The lending team obtains all the necessary information and details regarding overdue or rescheduled projects and prepayments from the operations team and “prepares the communication that lenders will receive on the day of repayments”.
To do this, they add a message prepared in all languages ”on the Project Activity page and change the status of the project”. Whenever the project status is updated, a provision (a loss estimate) will be “applied to your outstanding capital and your net IRR will be adjusted,” the company noted.
The October team further noted:
“Finally, when the Operations and Lender Relations teams have completed their tasks, the Tech team processes repayment transactions and monitors them in the event of an error. Over a million transactions are processed each month by the team! In addition, they are responsible for generating new repayment schedules and managing credit repayments and prepayments.
Even when all the teams coordinate their efforts, “refunds can be delayed” due to several different issues, the October blog post revealed.
They also mentioned that the mandate is an authorization provided by the borrower, during the formalization of the loan agreement, which allows October to “debit his bank account every month”. The borrower’s bank is then required to register this mandate so that October can proceed with the debit.
As reported in October, mandate issues usually arise when bank registration fails. For example, if the mandate is registered “with a bad reference”. In this case, there will be “a mismatch between the reference of the mandate and the information in the bank, which will lead to the failure of the direct debit,” notes the October blog. He also mentions that the direct debits being made at the beginning of the month, October “generally has a sufficient margin to resolve the problem of the mandate and invoice the deposit before the date of the repayments”.
Technical problems can also arise and be “related to a third party problem or be internal”.
The company clarified:
“October does not directly manage our clients’ money. Every borrower and lender has a portfolio on Lemon Way and this is where October monitors financial transactions. At the same time, Lemon Way is backed by banks. If one of these players encounters a technical problem (the origin of which may be various), even temporary, this can create a delay in our reimbursement processes.
“It is the same for October. Any technical problem on our system may slightly delay the reimbursement, for example an unforeseen maintenance of the servers by our host or an overload of the servers. If this happens, our technical team will do their best to resolve the issue as quickly as possible.
It could also be that the company does not have enough funds in the bank account to “pay off its loan and the bank refuses the direct debit”, which “means we do not receive the money,” noted the October team.
In this case, their operations team is the one who “contacts the company to understand why the direct debit was denied and to find a solution.”
Depending on the situation, there may be two different scenarios or possibilities.
As reported in October, the company may be able to “straighten out and transfer the money before or near the repayment date.” Refunds are “credited to your October account,” the company noted.
Or, the business may “really have a liquidity problem” and therefore “may not be able to repay the lenders”. The Lenders Relation team “communicates the late payment to the project lenders and the recovery actions will start”.
As reported in October:
“When a borrower has liquidity issues and is in default, our operations team connects to understand the business situation. Together with the borrower, they will try to find ways to collect the outstanding debt.
If the company works in co-operation with October, the online lender “will carry out amicable collection actions”. Amicable recovery “goes from a rapid settlement of the deposit to a rescheduling process if the company encounters more structural difficulties,” October explained.
The online lender also mentioned:
“If the company is unwilling to cooperate with October or if the company is in insolvency proceedings, we will initiate legal recovery actions. In this case, we will take care of the legal proceedings with the external collection agency and external partners (lawyers, receiver, etc.). Legal proceedings are generally a lengthy process, and recovery updates may become less frequent during this time. Lending to companies represents a risk of loss of capital, but our mission is to defend your interests at all times.
“At October, we believe in transparency. By sharing … our processes, we aim [to] build a relationship of trust with our community of borrowers, lenders and partners.