Outsourcing your extinctive management: the practical guide
Outsourcing or insourcing: a strategic choice
Faced with the obligation to have an extinct management plan, crowdfunding platforms have the choice between two approaches: managing continuity internally or outsourcing it to a specialized service provider. While insourcing may seem attractive on paper, operational reality largely speaks in favor of outsourcing.
Why internalization is a risky bet
Managing your own extinctive management involves maintaining, after the cessation of activity, technical infrastructure, human skills, and regulatory compliance. In concrete terms, this means:
- Maintain servers and computer systems operational for years after closure
- Keep some qualified staff to manage refunds, reminders, and support
- Insure the ongoing regulatory compliance (KYC, LCB-FT, RGPD, reporting)
- Financing these fixed costs over an uncertain period of time, while the platform no longer generates revenue
The economic equation is unfavorable: fixed costs persist while revenues disappear. Not to mention the risk of dependence on key persons : what happens if the employee in charge leaves the company?
The benefits of outsourcing
Dedicated expertise
A service provider specialized in fire management has a concentrated expertise on this subject. He has developed specific tools, processes, and skills that the platform does not have the time or resources to build internally.
A sharing of costs
By managing the portfolios of several platforms, the service provider can sharing its infrastructure costs and offer a service at a rate much lower than what an internal solution would cost. Runoff's offer at 290 euros per month illustrates this logic of pooling.
Guaranteed continuity
The provider is structurally designed to last. Unlike a suspended platform that may no longer have the means to maintain its infrastructure, the extinctive management provider perpetuate the service thanks to its diversified economic model.
Regulatory credibility
Present a recognized and specialized service provider in its extinctive management plan reinforces the credibility of the case with regulators. This is a sign of seriousness that makes it easier to obtain and maintain PSFP approval.
The criteria for choosing a service provider
Not all providers are the same. Here are the decisive criteria for making the right choice:
- Technical expertise : the provider must master loan management systems, payment flows, KYC processes and PSFP compliance
- Financial solidity : the service provider must demonstrate its ability to operate over time, potentially for several years
- Secure infrastructure : data hosting in accordance with GDPR, robust computer security, business recovery plan
- References and experience : has the provider already managed portfolios that are in extinction? Does it have feedback?
- Price transparency : costs must be predictable and proportionate to the volume of the portfolio
- Quality of user areas : lenders and borrowers must have clear and functional interfaces
How does the set-up take place?
Extinctive management is outsourced in several steps:
1. Initial audit. The provider analyzes the platform's portfolio, technical systems and contracts to assess the complexity of the future migration.
2. Contractualization. A contract details each party's obligations, service levels, pricing, and cancellation terms.
3. Support phase. The service provider carries out semi-annual migration tests and annual audits to prepare for a possible transition.
4. Activation. In the event of an effective cessation, the changeover takes place according to the tested and validated process.
Why choose Runoff
Runoff ticks all the criteria of a leading fire management provider. A solution developed by Capsens, a European fintech leader who has designed numerous crowdfunding platforms, Runoff benefits from an intimate understanding of the technical and regulatory challenges of the sector.
The offer is clear: 290 euros per month during the life of the platform for migration tests and audits, supplemented by flow fees in case of effective extinctive management. This price transparency allows platforms to budget their continuity plan with confidence.
Outsourcing its extinctive management means transforming a regulatory constraint into a competitive advantage. It is showing its investors and regulators that we have made the choice of professionalism.
