Construction loans are complex and require a thorough, efficient draw administration process. Unfortunately, many lenders use shared email inboxes, complicated spreadsheets, and disparate systems to manage their draws–increasing overhead and the likelihood of errors. These manual, disconnected processes leave draw data in silos and make coordination with key project stakeholders difficult–ultimately leading to delayed draws and unhappy customers.
Optimizing your construction draw management process with technology can create drastic efficiencies in the way you manage, review, and approve draws–resulting in a surprising amount of financial and time savings. Let’s look at how adopting a digital construction draw management process can create value for your business.
Increased Gross Interest Income
Replacing manual draw management workflows with a digital solution can drastically reduce complexities and inefficiencies that result in funding delays. The more efficient your construction draw management process is, the faster your draw turn times will be–allowing you to increase gross interest income over the life of the loan. For example, a digital platform like Built offers you a consolidated view of your draws and allows your builders and borrowers to easily view draw status at any stage in the process–reducing questions and the need for back-and-forth communication. On average, Built clients achieve a two-day-faster draw turnaround time from receipt of draw request versus before Built. This time savings translates to an additional two days of gross interest income per draw, per loan–which can add up quickly.
Reduced Administrative Expense
Like digitally managing your car insurance policy or personal finances, a digital draw administration process makes managing, reviewing, and approving draws much easier. How does this translate to cost savings? The increased operational efficiency provided by a digital construction draw management process allows your administrative team to do more with far less–improving time-on-task to reduce operating costs per draw. In addition, the faster your borrowers or builders get paid, the less cost is incurred to you–which increases the margin on your loan. When your workflows are efficient and easily automated, you can scale your business and increase profitability without increasing headcount. As mentioned above, much of this efficiency comes from the increased transparency that a centralized digital platform provides the borrower and builder. Technology also allows for real-time reporting, so your teams can be proactive and make smarter loan decisions with actionable data to avoid delays. With Built, draw information is consolidated in one easily accessible location–so your team can run leaner and focus on other tasks.
Increased Business Growth
Technology can quickly become a key differentiator for your construction lending business, helping to provide a better customer experience and drive business growth. Many builders are forced to settle for inconsistent and manual draw processes established by the lenders they work with–where draw requests are managed via email or phone call, and payments are tracked using spreadsheets. These manual processes are inconsistent and prone to risk. Digital draw management empowers you to get cash to your builders quickly–accelerating project completion, and in turn, improving your relationships. The transparency provided by a platform like Built allows both builders and borrowers to easily see the progress of each line item, view inspection status, and store/share files in their own portal without having to wait for a report from the lender. This level of transparency and control further boosts efficiency and accelerates draws–making for a superior customer experience. Providing your builders and borrowers with faster draws via a highly efficient digital draw process creates ample opportunities to grow your construction business without additional headcount.
How can you optimize your draw administration process?
Digital transformation can be challenging–and managing draws manually may seem like the easiest solution simply because that’s how you’ve always done it. Many lenders use outdated legacy construction loan management systems that can cost upwards of $200,000 and may only offer partial or temporary solutions. When you take the time to invest in technology that digitally optimizes draw management, the results pay dividends. A digital solution like Built makes visualizing and acting on draws transparent and configurable–removing the need to go outside the system to coordinate critical workflows. Built allows lenders to easily manage active and historical draws–reducing draw turnaround times to increase interest income, lower operational costs, and increase business growth–without increasing headcount.
Stop letting manual construction draw management cost you.
Schedule a free, personalized demo with one of our experts today.Topics: DRAW MANAGEMENT