ISYS316 - Business Process Modelling: Redesigning RFC Payment System

This report delves into Business Process Modelling (BPM) within the context of the Reliable Finance Company (RFC). It reviews and evaluates strategies, particularly those related to payment processing, to enhance the company's competitive edge. The report identifies governance issues within the current payment system, such as security vulnerabilities and delays in updating outstanding loans. Recommendations for improvement include implementing a loan management software, secure payment gateways, and automated notification systems. A new process model is proposed using Business Process Modeling Notation (BPMN) to visualize and streamline the redesigned payment processing system. The strengths and weaknesses of the BPMN technique are discussed, highlighting its role in cost reduction and process visualization. Ultimately, the report concludes that implementing BPM can significantly benefit RFC by improving agility, reducing costs, increasing revenue, and enhancing security and compliance.

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Business Process Modelling

Executive Summary
This research projects light on Business Process Modelling.
The research ensures to review, examine and evaluate the strategies and plans adopted by
Amazon, to give strong competition to its competitive companies in the market. The
obstacles faced by the company are highlighted and how it overcame the interruptions is
presented in this report. The other perspectives of its strategies and growth are reviewed.
Subsequently, the achievements and problems, why the company came down, its risk
barriers and rectification are the aspects that are reviewed. The positive perspectives
determined about the company is that, it accepts its failure and has patience to await for
long term benefits. It is observed to have excelling operational excellence. Additionally, it is
also determined that Amazon believes in customer obsession when compared to competitor
obsession.

Table of Contents
1. Introduction.......................................................................................................................................1
2. Current Payment Processing System...............................................................................................1
3. Analyzing Governance Issues...........................................................................................................1
4. Required changes that can improve the payment Processing System...........................................3
5. New process model to re-designing payment processing system-200.............................................4
6. Conclusion..........................................................................................................................................4
References..................................................................................................................................................7

1. Introduction
The case considered for the analysis is referred to Reliable Finance Company(RFC). It
started its roots by lending money to the businessmen and farmers of a small town and currently
it has 178 branches in many places like Sydney,Brisbane, Melbourne and Adelaide. It helps
with loans for purchasing automobiles, for home improvements and home appliances.For
managing the company a new management team is allotted, to work on the company’s growth
plan and expansion. The new plans needs enhanced information system, which can help in
processing the loan transaction, settlements and payments. The redesigning of current payment
processing is considered. The scope is that, the plan is limited only to improvise the payment
process. The scope must be a limited and preplanned budget.
The objective of this report is to develop a new management plan, to help in growth plan
and expansion of RFC.
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2. Current Payment Processing System
The current payment processing system followed in RFC is represented in the below
diagram.
Security Issues
The encountered security issues includes, no secure mode for payment. It is
recommended to opt a secure payment gateway, to avoid security breaching by the hackers.
3. Analyzing Governance Issues
The issue observed in the current payment processing are discussed in the below section.
The APR (Advice of Payment Received) is used in the current payment mode. APR comprises
of interest along with other financing costs. APR is not an ideal method for gauging the
complete mortgage cost (NerdWallet, 2018).
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There is delay in updating the outstanding loans. The process is complicated, time
consuming and confusing.
To complete the payment, security is missing. There are more possibilities for security
breaches. The current system is not automated. Moreover, it is not even simple. On the other
hand, only afternoon time is selected for depositing the payment to the branch’s bank. This can
result in increasing the missing information about the payments and updating.
Further, the delinquency analysis system works on a weekly basis, where the
outstanding Loans file present in the Home Office are checked and then the overdue of payment
is determined. This process causes delay in the whole payment system. In a 15 days span for the
payment, the payment which are overdue for 15, 30, 45, and 60 days are produced by Aged
Trial Balances Report. Initially, the customers are sent a polite Reminder, then while the
payment is overdue for greater than a month then a less polite reminder is sent. Similarly, the
customers are sent with four reminders, and the politeness varies based on its remainder
number. The remainders are generated by using a computer. Once the payment is kept due for
two months then, the customers Collections Department comes into picture. One of the
collections agent keeps a follow up with the customer to return the amount.
When it comes to making payment, if the customer dies or goes missing, there are no
hopes for getting the loan money back.
Current Issues
a. Only 80% of payments are paid to the branch personnel, and the rest are mailed
to the Home Office. There are more issues of missing payment voucher from the
mailed payments. Tracing the payment is complicated.
b. Wrong APR is generated at times.
c. There are serious issues in processing the payments.
d. Tracing the payment by calling to the Home office is a difficult and delayed
process.
e. More clerical overhead issues arise, like recording the payments and making out
APRs.
f. Difficulty in isolating the Outstanding Loans through File system.
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g. The collection amount goes missing due to the file system and late payments.
Delinquency profile is helpful to know the customers’ potential.
h. There are chances of modifying the potential delinquency profile.
i. The company’s balance book is incomplete and the complications in planning
the cash flow occurs.
j. The current payment system includes technical issues,
k. The business also faces complexities with the delayed and outdated payment
process.
This determines that RFC requires serious help, through Business process modelling and
controlling the considered process. The drawbacks of the payment process impacts on the
accounts management, workflow and expansion of the company (Slepian, 2014).
4. Required changes that can improve the payment Processing System
The stakeholders in this project are, the creditors, directors, government and
shareholders/ owners.
1) The billing process can be improved. (Leis, 2017).
2) RFC must include a loan management software in the new design.
3) Secure gateway for making payment.
4) Automatic notification system.
5) Easier lending with origination, covenant tracking, underwriting and collateral
management.
6) The complexity must be reduced with a loan management technology. It helps to
have manage all the workflows with electronic compliance, calculations,
financial analysis, and serves better with a single platform. It discards manual
processes, missing details and duplication or modification of data. This software
ensures to be efficient with less cost(Finastra, 2018).
7) The payment and invoice process must strengthened. This will help to enforce
control on the processes(Icac.nsw.gov.au, 2018).
8) To expand the number of branchesEffective payment process can help, by
increasing the profit margins(Manufacturing.net, 2013).
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5. New process model to re-designing payment processing system-200
The Business process management (BPM)assists the organizations to get ready to
compete. Its main aim is to help the organization leaders to improve their performance in the
areas like, analysis, design, inspection, modification and controlling the business processes
(Breyfogle, 2014). The emphasis is on redesigning the payment processing system in RFC.
RFC must include a loan management software in the new design.Centralize data,
ensure streamline workflow along with automation, ensure to use electronic invoice, standardize
the process, and upgrade the technology(Invoicing & More!, 2018). The process is speedup by
online payment, then by automatic remainders and notifications (Kniola, 2014).
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Strengths and Weaknesses of Modelling Technique
For this project, the BPMN (Business Process Modeling Notation) is the technique used
for modelling.The BPMN helps to visualize the newly modeled process and the effectiveness
and drawbacks of the new model can be determined easily. It reduces cost and provides better
visualization of the process. In a business process, BPMN represents all the end-to-end flows.
The notation are mainly designed for coordinating the processes with its right and effective
sequence. Moreover, in a process it establishes a set of related activities where the information
flows betweendifferent participants(Tangkawarow and Waworuntu, 2016). The model also
helps to represent the data efficiency in the process.
6. Conclusion
The current Payment process of RFC is redesigned using BPMN technique. Various
drawbacks or disadvantages of the current system are identified. It is suggested that, the new
payment processing system must be automated and it should have a secure gateway, and loan
management software, for overcoming odd experiences. The strengths and weaknesses of
BPMN are listed.
Therefore, it is understood that implementation of BPM can benefit the organization in
terms of improved agility, decreased costs, increases revenue, increases efficiency, provides
better visibility, security , compliance, and safety for the organization's assets. The BPMN helps
to visualize the newly modeled process and the effectiveness and drawbacks of the new model
can be determined easily.
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References
Breyfogle, F. (2014). Five Benefits from Implementing Business Process Management. [online]
Qualitymag.com. Available at: https://www.qualitymag.com/blogs/14-quality-blog/post/92305-
five-benefits-from-implementing-business-process-management [Accessed 20 Apr. 2018].
Finastra. (2018). Lending. [online] Available at: https://www.finastra.com/solutions/lending
[Accessed 20 Apr. 2018].
Icac.nsw.gov.au. (2018). Five ways to better invoice payment control. [online] Available at:
https://www.icac.nsw.gov.au/newsletter/issue44/invoice-payment-article.html [Accessed 20
Apr. 2018].
Invoicing & More!. (2018). Accounts Payable Process Improvement Ideas. [online] Available
at: https://www.invoicera.com/blog/accounts-payable-process-improvement-ideas/ [Accessed
20 Apr. 2018].
Kniola, F. (2014). 4 ways to speed up the payment process in your company. [online]
invoiceOcean. Available at: https://invoiceocean.com/4-ways-to-speed-up-the-payment-process-
in-your-company [Accessed 20 Apr. 2018].
Leis, M. (2017). 10 Easy Steps to Improve Your Billing Process Right Now. [online] Scoro.
Available at: https://www.scoro.com/blog/steps-for-improving-billing-process/ [Accessed 20
Apr. 2018].
Manufacturing.net. (2013). Improving Profit Margins Through Better Payment Processing.
[online] Available at: https://www.manufacturing.net/article/2013/10/improving-profit-margins-
through-better-payment-processing [Accessed 20 Apr. 2018].
NerdWallet. (2018). What Is APR and How Does It Affect Your Mortgage?. [online] Available
at: https://www.nerdwallet.com/blog/mortgages/apr-annual-percentage-rate/ [Accessed 20 Apr.
2018].
Slepian, M. (2014). Role of Finance Teams Expanding as Business Complexity Increases:
CGMA Survey. [online] AICPA. Available at:
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https://www.aicpa.org/press/pressreleases/2014/role-of-finance-teams-expanding-as-business-
complexity-increases-cgma-survey.html [Accessed 20 Apr. 2018].
Tangkawarow, I. and Waworuntu, J. (2016). A Comparative of business process modelling
techniques. IOP Conference Series: Materials Science and Engineering, 128, p.012010.
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