Loan Monitoring: Overdue Buckets, Field Collections and the Weekly Review

Many small lenders learn their overdue position only at month end, after an afternoon spent filtering spreadsheets and phoning branches for the figures nobody had recorded. The visit is already late. Borrowers have stopped taking calls.

Accounts should sort themselves every night into five groups, from current to over 90 days late, so the morning list is ready before anyone opens a spreadsheet. The bucket picks the action.

A bucket total alone is useless. Behind each figure you need the borrower list with phone numbers and last promise dates, so a number turns into a collector’s route the same morning.

A borrower in the first bucket can usually be recovered with one phone call made within a day or two of the missed date, before embarrassment sets in. By 90 days more calls change little.

Treat a first miss as an event. Ask whether it was a cash-flow gap, a family emergency or a collector who did not turn up on the usual day, because each cause needs a different response.

Write every promise to pay against the loan record with the date promised and who took it, so the next caller starts from facts. A promise kept twice tells you something. A promise broken twice tells you more.

A collector walking in at seven with a bag of cash and a notebook is the weakest point in many small lending businesses. If the total is short, nothing links a missing amount to a borrower, a day or a route, and the search starts from zero.

Each receipt should be entered against the borrower the moment it is taken, on the collector’s own phone, carrying the collector’s name and the date. Head office sees it that afternoon.

At closing the accountant’s job becomes matching the day’s cash against the receipts already recorded, collector by collector, before anybody leaves the branch. A gap shows that evening. Nobody waits for the audit.

Fix a day and keep it. The review is short when the records are clean and long when they are not, so its length measures your record keeping.

Look at what was due against what came in, split by collector, by branch and by bucket, and write down the reason for every shortfall. A collector who always meets demand and one who always misses it both need a conversation, for opposite reasons that only the receipts can separate.

Bring these five figures.

A renewal or a top-up given to hide an overdue account is how a small book goes bad quietly, one decision at a time. Read the full repayment history first, and keep the old schedule on record beside the new one, so the restructure can be explained to an auditor later.

If you disburse a handful of loans a month and know every borrower by name, a well-kept spreadsheet is still enough for the whole business.

Once there are field collectors, group loans or more than one branch, a loan management system keeps each loan on one record. It runs from enquiry and KYC through sanction, disbursement, the EMI schedule and every receipt, with the person and the day on every change. It is not a core banking system. It makes no lending decisions.