For CRE servicers, every decision is an opportunity to thrive or fall behind. In this post, we explore three pervasive missteps commercial real estate servicers often make and strategies to mitigate them.

Misstep #1: Underutilizing Servicing Systems You’ve Invested In

A common pitfall for many CRE servicing businesses, especially when investing in new servicing systems, is underutilizing the technology. This issue often stems from a combination of factors including limited in-house resources dedicated to managing the system, budget constraints that limit investment beyond the initial purchase, a reluctance to alter existing processes that are perceived to be working, and a lack of understanding of the full capabilities of the purchased solution.

The impact of underutilization can vary significantly. In the best-case scenario, a business might simply be wasting money on unused features. However, in worst-case scenarios, underutilization can lead to more severe problems such as operational inefficiencies where manual processes continue to exist alongside digital ones, creating divergent work streams and data sources. This can often require an intensive 'true-up' to synchronize the disparities, a process that in itself is a huge resource strain.

Misstep #2: Failing to Properly Test Systems Before Rollout

Another frequent misstep servicers can make, particularly when adopting new technology systems, is failing to fully test systems and processes before rollout. This mistake is typically made due to several pressing factors including limited time and resources, looming deadlines, and a general lack of rigor in approach to system testing. Testing demands a skill set distinct from daily operations; it requires meticulous attention to detail and the ability to envision and test every possible scenario thoroughly. Further, it must include the hand-off points or interactions between processes, data, and business units. To truly capture and synthesize results, there must also be rigor in documentation. Often, businesses fall short in one or more of these areas; especially when the project is being staffed by team members with other full-time jobs.

The repercussions of inadequate testing can be severe. A system that hasn’t been thoroughly tested can fail in critical ways, forcing businesses to devise workarounds that drain resources and perpetuate inefficiencies. This can lead to bad data that compounds existing problems, creating a vicious cycle that can be difficult to break. This kind of breakdown impacts not only day-to-day operations but can have long-term repercussions on business integrity and customer trust.

Addressing and preventing these issues requires a proactive and thorough approach. There is no "pause button" in CRE servicing, making it crucial for businesses to be deliberate in understanding what the system or process is meant to accomplish. Anticipating potential challenges and properly structuring testing and deployment are key steps toward ensuring a smooth integration of new systems and processes.

Misstep #3: Relying On Resources That Lack Bandwidth And/Or Expertise

A third critical misstep that servicers often make is overextending their resources, asking employees to undertake tasks that exceed their available time or skill sets. This mistake often stems from the fact that businesses have inherently limited resources, and the cost of building teams with specialized, dedicated roles can seem prohibitive. There may also be a concern about agility; companies hesitate to invest in fixed costs for capabilities they fear might not be consistently needed.

The consequences of spreading resources too thin can lead to employee burnout and poorly managed projects, which can result in the loss of talented team members as well as significantly extended timelines for project completion. This can also lead to project failure with a significant impact on financials and a drain on employee morale.

To mitigate these risks, companies should consider dedicating appropriate resources; appointing dedicated project managers and team members, or bringing in specialized talent. Exploring outsourcing can also offer flexibility and scalability, allowing businesses to adjust their resource levels in response to changing needs without the commitment of permanent overhead.

How We Can Help

Whether you’re trying to set up a new platform or process, get the most out of one you already have in place, fix issues that arose from missteps, or bring on resources you need to scale your business, Infinitum can help. We’re fully focused on CRE servicing and put that expertise to work to help clients establish strong, efficient, and scalable businesses that meet servicing standards. We know servicing systems and optimal processes inside and out and can ensure that yours is set up to meet your organization’s specific needs, fully tested to support the range of uses, and rolled out effectively. This can help your people stay focused on your customers while we take the lead on working through complex systems and processes.

About Infinitum

Infinitum is the pre-eminent solutions provider to the CRE loan servicing industry. The firm provides comprehensive advisory, operational risk management, and talent solutions that enable commercial real estate loan servicers to meet servicing standards and establish strong, efficient, and scalable processes. To learn more about how Infinitum can help your servicing business, explore our offering at www.infinitumcre.com/our-services.