In 1939, Bill Hewlett and Dave Packard started a business with a single product: a Resistance Capacity Audio Oscillator. At that time, Bill and Dave were responsible for every aspect of their business: they invented and built the products, priced and packaged them and shipped them, dealt with customers and sales representatives, kept the books, and wrote the ads. Then at the end of the day, they swept up the shop.
I imagine it wasn’t long before the two of them sat down and put together a Business Plan and started asking themselves questions such as:
Are any of these daily tasks, a revenue generator? Or, are any of these our primary business? Are they what we do best? Am I so good at sweeping the floor or writing ads that someone else would hire me to do it? No doubt, the answer was a resounding and emphatic “NO”. At that point, I’ll just bet it didn’t take an “out of body experience” for them to determine exactly which activity was the driving force of their revenue. They no doubt determined their competencies and identified them as the very heartbeat of their business and determined the development of these competencies was where they should spend their time, effort, and financial resources.
These competencies are what one writer identified as “core competencies”. These could be purchasing performing or non-performing notes, mortgages, business notes or mobile home notes, purchasing receivables, auto loans, leases, and lotteries. Perhaps you provide a service such as real estate, counseling, note appraisal, mortgage brokering, non-traditional real estate, loan originating, real estate developing, or exchanging. Clearly, the core of your business is defined as “that which drives your revenue”.
If the task does not “drive your revenue” you may want to consider “Outsourcing” such tasks as your Accounting Department, Legal Department, Advertising, Marketing, and Promotion to name a few. So, what is this “Outsourcing”? Basically, outsourcing is a term used to describe a contractual relationship with a specialized outside service provider for work traditionally done in-house. The term reflects the fact that work that is done “outside” the company, or “outsourced”. Outsourcing is now generally accepted as part of the business picture.
This reminds me of a recent informal brainstorming session I had with a group of real estate and note investors following an investment conference in L.A. The primary issues they faced were: How can we stay ahead of the competition, what is the best way to reach their customers, and How can we cut the cost of reaching these objectives.
They concluded one of the answers and options to consider was “outsourcing” those activities and/or departments that did not generate revenue, so they could spend more time and resources on what they did best – the things that generated income. Sounds so simple, and yet it is extremely difficult to change.
During this time of high cost of operation and tight market in the changing world of note investing and brokering with a shrinking margin of profit, perhaps it’s time to seriously consider the outsourcing “collection and servicing of your note portfolio”. Otherwise, you may be in danger of losing your competitive edge and finding yourself behind the wave. Perhaps it’s time to ratchet down, prioritize, and conserve time, expertise, and money.
The fear of losing “control” or “identity” is often the root cause of why many companies defer making a change to outsourcing. Others are concerned with the transition process, continuity of customer care, and data conversion. Typically all these concerns as well are mitigated with Requests for Proposal (RFP’s) gathering information and due diligence on the part of the company. Issues are addressed, solutions found, and contracts are negotiated in the best interest of all parties.
Why not ask yourself, “What is the true cost of maintaining in-house Note Servicing?”
For many note investors, both institutional and private, significant resources are spent on systems, software, and the hardware required to service their own note portfolio. This together with the training, turnover, and overhead involved to maintain, training, and retain personnel are outweighed by the cost of lost opportunities, downtime, and compromised productivity. Servicing is not as easy as it appears at first blush. It can be complex, time-consuming and it requires an infinite amount of attention to detail and patience.
It just might be time to get down to business by asking the following poignant questions:
- Is servicing our revenue generator
- Is it what we do best?
- Is it the “core” reason we are in business?
- Do we “use the information” generated from note servicing, or do I spend my time generating the information.
- Am I so good at doing this servicing that others would hire me to do this?
- Will the decision to outsource the Note Servicing give me more time to focus on Note Investing.
- Will outsourcing provide me with the opportunity to be a “user” of the information instead of a generator?
- Can I reduce the cost of my overhead?
Once you decide to use an outside firm to do the servicing of your cash flow(s), it is important you consider the following issues when choosing a servicing company:
- Will I be receiving up-to-date accounting technology, without up-front costs?
- Can I embrace and use for my advantage the expertise of experts with a body of knowledge not available within my company?
- Will I be obtaining access to skilled people?
- Will they be available to my management team and me?
- Will they respond readily to inquiries?
- Will they communicate progress?
- Will they deliver courteous personal service?
Consider the benefits of choosing Note Servicing Center to “outsource” servicing of your notes and other cash flows:
- You have the benefit of our highly sophisticated computer system, proprietary in design and on the cutting edge of technology. The system meets all requirements of trust accounting for the Department of Real Estate and is updated as new regulations occur.
- You have at your disposal a team of innovative, creative, and experienced staff. With over 95 years of combined experience in all phases of real estate, real estate development, exchanging, mortgage brokering, mortgage banking, syndication, and development. The staff is available for note counseling, structuring, appraisal, and modification. NO NOTE IS TOO DIFFICULT TO SERVICE.
- A “seamless conversion” of Data for the client with a large portfolio of notes is available. The conversion process is on an individual basis depending upon the existing data format and is addressed in a response to a Request for Proposal (RFP) and implemented in the transition period.
- If you are concerned with the loss of identity; Private Labeling is available on all payment coupons, receipts, documents and reports, and correspondence to the individual client or investor.
- NSC provides service beyond the competency of most institutional and individual investors and yet, you get the credit for it.
- An Account Representative is Available each business day between 8:00 and 5:00.
- Personal Service and Customer Care is the Hallmark of the service provided by Note Servicing, and the “key” to their success and longevity in the industry. NSC servicing is like having an entire staff at your disposal 24 hours a day.
- Until now, only the large institutional note investors could afford professional note servicing. Now you can have access to a World-Class innovative Servicing Company with a guarantee that defies competition and personal service that defies description.
Yes, we understand a decision to outsource any aspect of your business is a major organizational decision. But, to achieve the performance you desire in your business, you may come to the realization that it just doesn’t make sense to invest resources in “non-core” activities. Not if you plan on growing and succeeding.
For useful information on how Note Servicing might be able to empower you to concentrate on what you do best or; for an appointment to open a dialogue on how “what we do best” would help you succeed. Contact: Tom Standen at 209-966-3445 x 11 or e-mail to [email protected]
This article was modified from an article originally written by Note Servicing Center and posted to this site on 2000/06/12.