Analyzing Business Complexities: A Case Study of RFC Finance

This case study examines the business and technical complexities faced by Reliable Finance Company (RFC) as it plans for expansion. The analysis identifies three key issues: faulty customer profiling leading to loan defaults, a faulty loan received accounting method causing difficulties in tracking payments, and payment gateway failures resulting in inaccurate payment reminders. To mitigate these issues, the study suggests implementing appropriate customer profiling criteria, developing a software-based payment accounting system to track both offline and online payments, and updating payment gateways to ensure accurate and timely processing of payments. The recommendations aim to enhance the company's operational efficiency and reduce financial losses, supporting its growth plans.

Running head: BUSINESS COMPLEXITIES IN FINANCIAL COMPANIES
Business Complexities in Financial Companies
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BUSINESS COMPLEXITIES IN FINANCIAL COMPANIES
Answer:
The analysis of Reliable Finance Company or RFC would reveal several technical and
business complexities as far as its business operations are concerned.
Issue 1: Faulty customer profiling:
The first complexity which one can point out is that the business technique of RFC was
that the company did not maintain proper profiling of customers while offering them asset
products or loan. The study reveals that the company offered loans to farmers and businessmen
whose loan applications were not approved by banks. Thus, one can infer from this that the
business operations of RFC consisted offering loans whose applications banks had rejected in
spite of being financially stronger. This faulty customer profiling resulted in non-realisation of a
large amount of loan each year which caused huge financial losses each year (Martin, Borah and
Palmatier 2017).
Mitigation:
This issue could be mitigated by appropriate profiling of customers. RFC should
consider criteria like financial capacity of the customers, their life style sources of income and
any other ongoing loan before approving their loan requests (Morey, Forbath and Schoop 2015).
Issue 2: Faulty loan received accounting method:
The next business issue which can be pointed out is that faulty documentation and record
keeping between the head office and the branch offices of RFC. The issue also has a technical
angle as well. As pointed above the bulk of the customer base of RFC consisted of agriculturists
and businessmen who made direct payments of instalments to the branch staff. The 20 percent of
the payments which were made online were mailed to the head office for accounting often,

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without proper voucher. This technical error made business accounting of the online loan
instalment payments for the head office very tough and complex (Jun 2015).
Mitigation:
This issue of faulty processing of offline and online payment received could be mitigated
by maintaining a proper payment received accounting system based on software. The software
would enable the staff making entry of the payment choose offline or online option depending on
the mode of receiving the payment. The software should also be able to track online payments
directly made by the customers. It should facilitate management both by the central accounts
departments and the branch staffs making entries once the payments are received (Paudel et al.
2016).
Issue 3: Payment gateway failures:
The third issue revolved around the payment gateways which the customers used to make
online payments. The payment gateway did not update the payments made after 10 days of the
due date. The payment gateway often sent faulty reminders even after the customers had made
payments (Morey, Forbath and Schoop 2015).
Mitigation:
Reliable Finance Company should update the payment gateways of the company which
the customers used to make payments. The gateway should be enabled to process payments
made at all times and on any day by customers. The system should be able to update the
outstanding loan accounts of the company immediately after a payment is made. The system
should not send faulty payment reminder messages to customers (Martin, Borah and Palmatier
2017).

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References:
Jun, J., 2015. Entry of Non-financial Firms and Competition in the Retail Payments Market.
Martin, K.D., Borah, A. and Palmatier, R.W., 2017. Data privacy: Effects on customer and firm
performance. Journal of Marketing, 81(1), pp.36-58.
Morey, T., Forbath, T. and Schoop, A., 2015. Customer data: Designing for transparency and
trust. Harvard Business Review, 93(5), pp.96-105.
Paudel, B., Gopaluwewa, T.H., De Waas Gunawardena, M.R., Wijerathna, W.C.H.,
Samarasinghe, R. and Perera, H., 2016. ViviSight: A sophisticated, data-driven Business
Intelligence tool for churn and loan default prediction.