In Funding Societies, every Note that is put up in our platform to crowdfund has gone through our own rigorous credit assessment. This also means that you will be investing in established companies who have passed through our rigorous credit assessment. We assess the Issuer’s credibility based on both the financial and non-financial parameters which include financial assessment, non-financial assessment, client interview and site visit. However, it is important to always review the factsheet of each investment opportunity before investing.
Regardless of how we have strengthened our credit assessment and the eligibility for the Issuer to onboard with us, the business landscape is oftentimes unpredictable which results in the potential risks of delays in payments and even default that are associated with SME Debt Financing.
Delays in receivables, loss of revenue and other macroeconomic factors that may be outside of the Issuer’s control can result in delays in payments and even default. However, in Funding Societies we always strive to provide the best possible to protect our investors’ returns in exploring all possible recovery avenues. We have our in-house collection team who does not only pursue any defaulted notes but also every single late payment note.
Let us bring you through what are the recovery efforts that we take in Funding Societies.
Restructuring of Notes
Debt collection agencies
Restructuring of Notes
This means altering an existing payment structure to a new structure by lengthening the financing tenure, changing the structure and frequencies of payments. This method will help in the recovery process on distressed Notes and increase the possibility of collections from the Issuer.
In most possible cases, our collection team will first negotiate the payment terms with the Issuer to come to an agreement which would benefit both investor and the Issuer. This approach is a win-win situation for both parties to avoid the hassle of initiating legal action. Where possible, initiating legal proceedings against the Issuer would be the last resort as it may involve a lengthy and costly process with no guarantee of recovering back the payments.
Debt Collection Agencies (DCA)
In Funding Societies, we also engage debt collection agencies (DCA) to assist in collections. While we engage debt collectors, our internal collection team will also simultaneously continue to follow up with the Issuer on the missed payments. We consider DCA as an additional help to assist in the recovery process for better collection avenues to look or contact the Issuer and to conduct site visits where necessary. In the event where the Issuer is not contactable, DCA will be a more feasible option than to commence legal proceedings where most cost may be incurred.
Table below shows differences between our internal collection and debt collection agencies.
Debt Collection Agencies
additional collection effort
existing contacts of the Issuer
extra leads to search/reach the Issuer
site visit within the state
conduct site visit more effectively out of state
Litigation is usually the last avenue we resort to when a Note turns default as it involves a lengthy and costly process without a guarantee of recovery. The decision to pursue further on the legal action will depend on whether the case is worthy of pursuit with advise from our collection team, internal legal counsel as well as external legal counsel.
Hope this helps in better understanding our recovery efforts.