Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Lashanda Mackey
Reviewed date: 2025-07-25
Next review date: 2026-07-24
This SOP outlines the standardized procedures for managing loan collections, addressing delinquent accounts, handling repossessions, and processing related financial and administrative tasks. The purpose is to ensure a consistent, efficient, and compliant approach to debt recovery and asset management.
This SOP applies to all staff involved in the collections process, including Loan Officers, Collections Analysts, and administrative staff responsible for billing, reporting, and asset tracking. It covers monthly collections activities, repossession procedures, and the use of financial systems.
Collections Officer: Primary point of contact for delinquent customers; responsible for communication, payment follow-up, and monitoring repayment progress.
Administrative Staff/Collections Department: Responsible for preparing reports, updating financial systems (e.g., Xero), and managing repossession documentation.
Management: Reviews collections reports and provides oversight on collections and repossession activities.
Generate the monthly billing report from Xero by going to "Xero Collections," then "Accounting," and then "Accts. Transaction."
5.1.1 Generate the monthly billing report from Xero by going to "Xero Collections," then "Accounting," and then "Accts. Transaction."
5.1.2 Sort the transactions by the end of the month/date and export the data to an Excel spreadsheet.
5.1.3 In the Excel sheet, calculate the net balance for Account 6402 by dividing the net balance by 1.165.
5.1.4 Calculate the collection fee by subtracting 0.30 from the collection fee amount.
5.1.5 Record activity made on behalf of Kahlil Parker under Account 6402 and activity made by others under Account 6403.
5.1.6 Send the final report to the lawyers at the end of every month (28th/30th).
5.2.1 Review the Collections Report to identify delinquent customers.
5.2.2 Contact customers with overdue payments via phone, email, and text.
5.2.3 Follow up with customers regarding outstanding balances.
5.2.4 Process payments received and update the system accordingly.
5.2.5 Monitor and track the progress of all collections activities.
5.2.6 Prepare regular reports on collection activities and their results for management.
5.3.1 Initiate the repossession process for customers with significant delinquency on vehicle loans.
5.3.2 Prepare all necessary documentation required for the repossession process.
5.4.1 Repossession Invoicing (New Item):
Enter the item name, cost price, and sales price in the relevant fields within Xero.
Calculate the total cost and sale price by subtracting any taxes or fees to get the ex-VAT price.
Use the calculated prices as the basis for determining VAT and final sale prices.
Save the item in Xero and record the calculated prices.
5.4.2 Leased Vehicles (VAT Included):
Log in to Xero and navigate to "Business," then "Products & Services."
Select "New Item" to input the vehicle's information.
Enter the Cost as "tax exempt" and the Sale price as "VAT on sales."
Apply the transaction to account 5105.
5.5.1 Create and print the invoice, loan agreement, promissory note, and security agreement.
5.5.2 Review and finalize the purchase order before sending it.
5.5.3 Ensure all required approvals and authorizations are obtained before finalizing the purchase order.
5.5.4 Monitor the status of the purchase order until completion.
5.5.5 Follow up on any outstanding payments or issues related to the purchase order.
5.5.6 Maintain a record of all purchase orders and related documents for future reference.
5.5.7 Communicate any updates or changes to the purchase order to relevant parties.
5.6.1 Copy and paste information from the end-of-month charge-offs into the designated template i.e. Contact Import sheet and Balance Import sheet.
5.7.1 Contact Import: Go to "Xero," then "Contacts," then "Import," and select the contact file to import.
5.7.2 Balance Import: Go to "Xero," then "Invoices," then "Import," and select the balance invoice file to import.
5.7.3 After import, go to "All Invoices" in Xero and approve them.
5.7.4 Open the contacts, label customers to their respective groups, and upload the last known loan of each customer.
5.8.1 Populate the sheet with information from the financing agreement or promissory note.
5.8.2 Insert the principal owed and legal fees.
5.8.3 Calculate the per diem amount by multiplying the principal owed by the interest rate (e.g., 19.x %) and dividing by 360 or 365 days.
5.8.4 Once the per diem is inserted, the formatted Excel sheet will automatically calculate accrued days and the total amount owed, including interest.
5.8.5 See Template
5.9.1 Create a new bill with the loan description.
5.9.2 Approve the bill.
5.9.3 Apply the credit from the overpayment.
5.9.4 The bill will be prepared to be allocated; append the correct amount to the bill.