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Preparing your business for scalability: automation and analytics for greater efficiency in loan processing

8 Aug 2023
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Cash flow analytics has helped revolutionize loan processing and lenders’ engagements with small businesses in the ever-changing financial lending world. Beyond traditional automation, cash flow analytics offer real-time insights, unlocking scalability and data-driven decision-making.

Understanding a business’s financial health through cash flow analytics is crucial for lenders, allowing them to dive deep into patterns to assess stability and growth potential. With real-time data, lenders can make informed decisions swiftly and accurately, ensuring efficient loan evaluations.

Understanding cash flow analytics

While cash flow statements originated in the 50s and 60s, modern cash flow analytics has recently emerged alongside advancements in AI and the availability of alternative financial data. With cash flow analysis software, lenders can use AI to examine a business’s cash inflow and outflow to understand borrowers’ financial dynamics better.

This is especially valuable for small business lenders that cater to a diverse range of applicants varying in shapes and sizes from sole proprietors to bustling 100-employee operations.

In loan processing and risk assessment, cash flow analytics plays an important role as an evaluation tool. It gives lenders a complete view of a business’s financial stability and performance, helping them gauge creditworthiness and repayment capacity accurately.

By automatically assessing various cash inflows and outflows in a standardized format, lenders can better understand a business’s ability to repay loans. This data-driven approach simplifies underwriting processes, reducing the risk of defaults and helping foster better borrower-lender relationships.

Leveraging standardized cash flow data for enhanced risk assessment

Cash flow data is a catalyst in loan decision-making, offering detailed insights into a borrower’s financial health and repayment ability. This data drives lending decisions, helping lenders navigate risk and shape loan terms to the borrower’s financial circumstances. To this end, consistent and comprehensive cash flow data is key to making confident lending decisions. 

Diving into historical cash flow patterns makes up a sizable aspect of evaluating an applicant’s creditworthiness. By standardizing their cash flow data, lenders can examine broader trends to assess a business’s ability to create revenue, manage expenses and service debt.

This type of analysis provides critical context for predicting financial performance, helping lenders gauge a business’s ability to meet future financial obligations and identify any signs of financial distress – or red flags for fraud. Through this detailed evaluation, lenders can make data-driven credit decisions that reduce the risk of defaults and safeguard their interests.

Ocrolus’ 100+ small business and consumer analytics offerings illuminate borrowers’ cash flow dynamics, including revenue, expenses, transaction categories, financial ratios, and trends.

Automated cash flow analytics for greater scalability

Embracing cash flow analytics enables small business lenders to unlock unparalleled accuracy and offers numerous advantages to lenders looking to scale their businesses.

Through predictive analytics, lenders can conduct intense risk assessments and evaluate loan performance more succinctly, creating more precise risk management and a greater ability to evaluate many types of loan applications strategically. Additionally, cash flow analysis offers the valuable advantage of enabling lenders to optimize loan terms and conditions by aligning them with borrowers’ cash flow patterns.

Cash flow analytics tools have become an indispensable part of the lending process, revolutionizing risk assessment and lending decisions and adding valuable context to borrowers’ financial situations.

By automating workflows and augmenting loan officers’ processes, lenders can offer a smoother and more efficient lending process, enabling them to process more loans and providing customers with greater access to capital to explore new opportunities such as moving into larger office spaces or expanding their fleet of vehicles.

Success story: cash flow analysis for small business lending

By streamlining loan processing, minimizing risks and delivering a personalized experience for borrowers, cash flow analytics is proving to be a crucial tool for small business lenders in today’s competitive landscape.

Yardline, a prominent eCommerce financing company, exemplifies the power of cash flow analytics when working with small businesses. Focused on serving professional sellers across major platforms like Amazon, eBay, Etsy and Shopify, many of the entrepreneurs Yardline worked with lacked access to aggregated banking data, leading to manual review of each banking statement.

To address this, Yardline integrated cash flow analytics provided by Ocrolus, enabling the digitization of bank statements and the generation of core cash flow insights. With the implementation of cash flow analytics, Yardline transformed its financing process, offering a low-effort way for customers to submit documentation and significantly accelerating the approval process.

Armed with real-time insights into a business’s financial health, stability and growth potential, Yardline now makes data-driven lending decisions with enhanced efficiency and accuracy. This competitive edge has positioned Yardline as a preferred choice for eCommerce entrepreneurs seeking fast access to capital.

Best practices for automating cash flow analytics

Leveraging automated cash flow analytics is key to making informed decisions quickly and achieving data-driven success. With Ocrolus’ automated cash flow analytics, lenders can save time and resources on previously-manual tasks, such as:

  • Identifying applicants’ sources of cash, including sales of assets, equity issuances and investments
  • Identify applicants’ uses of cash, including recurring transactions such as inventory purchases, rent, utilities and loan repayments
  • Calculate net cash flows from each activity category and account
  • Analyze cash flow against risk models to assess debt capacity and risk of default

With these automated features, lenders can conduct a thorough cash flow analysis that enhances loan processing efficiency for greater scalability and more confident decision-making.

Cash flow analytics has revolutionized the world of financial lending, streamlining loan processing and aiding in data-driven decision-making. Understanding the basics of cash flow statements, identifying all sources and uses of cash and building a comprehensive cash flow statement are essential steps for businesses preparing for scalability.

By analyzing cash flow data, lenders can assess creditworthiness, optimize loan terms and navigate risks more effectively. Leveraging technology, like AI-driven automation and predictive analytics, allows financial institutions to automate cash flow data analysis for greater long-term scalability.

Book a demo to learn how Ocrolus can help you achieve greater efficiency in lending operations.

Key takeaways
  • Cash flow analytics offers real-time insights and data-driven decision-making capabilities, enabling efficient loan evaluations by accurately assessing a business’s financial health, stability, and growth potential.
  • Standardized cash flow data in risk assessment allows lenders to make confident lending decisions based on historical patterns, reducing default risk and shaping loan terms according to borrowers’ financial circumstances.
  • Embracing automation in cash flow analytics offers small business lenders real-time insights and robust risk assessments, enabling them to process more loans more quickly.