Cash Flow Automation in Lending

Cash flow analysis is a critical component of modern lending. The process diversifies the applicant pool through financial inclusion, allowing non-traditional borrowers to qualify for funds by demonstrating robust cash flow.

Compared to traditional asset-based lending, cash flow analysis offers a more practical way to assess creditworthiness. Cash flow illuminates the ability to make payments over time and potential risks or red flags. For small businesses, cash flow is the main source of loan repayment funds.

With automated cash flow solutions, lenders can gain a much deeper understanding of their loan applicants and make faster, more accurate decisions.

What is cash flow automation in lending?

Cash flow automation uses technology to analyze how money moves in and out of a borrower’s account in real-time. This process eliminates tedious manual efforts, minimizes human error and speeds up the time it takes for lenders to move applicants through their pipelines.

The cash flow system is familiar, but a lack of reliable data previously hampered the concept. New digital banking and account aggregation technology give lenders access to comprehensive data points that provide a much bigger picture of an applicant’s financial health, such as average revenue, utility bills, or rent payments. Automated credit underwriting structures the data into a single view.

Cash Flow Automation for SMB, Consumer, and Mortgage Lending

Cash flow automation tools are particularly beneficial for small businesses, consumers, and mortgage lenders. The process offers an improved understanding of a borrower’s financial situation without relying on collateral or personal guarantees.

Within small business lending, cash flow analysis gives lenders a more transparent view of how reliable or regular an applicant’s cash flow is to be able to repay the loan or meet outstanding obligations. Done through automated transaction enrichment, cash flow analysis makes it possible obtain more information about the applicant’s business model, financial condition, future prospects, and credit history.

Cash flow lending analysis considers expenses such as car payments or utilities for consumer and mortgage applicants. The wide financial view gives options to borrowers with few assets and poor or limited credit.

What document types can be used to automate cash flow analysis?

The documents used to automate cash flow analysis are varied, depending on the type of loan. These documents include the following:

  • Bank statements
  • Pay stubs
  • Banking and transaction data
  • Credit bureau reports

Small businesses may also need to provide financial documents such as income statements and balance sheets.

Ocrolus’ cash flow automation solution for lenders

Ocrolus is an intelligent document automation solution that offers an automated cash flow analysis solution for lenders. The Ocrolus platform supports both digital and paper bank statements. It analyzes documents instantly or in minutes and generates highly accurate results on every statement, using advanced human-in-the-loop automation and machine learning algorithms.

Ocrolus offers lenders a fully automated and scalable solution to help them quickly scale up or down based on changing volumes. Automated cash flow analysis ensures lenders can reduce time and costs associated with manual data entry, allowing them to allocate their staff’s time to more challenging and differentiated activities.

Cash flow and automation combine into a powerful tool for lenders to gain insight into the financial situation of their loan applicants. Using Ocrolus allows for more accurate decisions for more borrowers. Lenders can provide best-in-class customer service while ensuring accuracy.

Book your demo to discover Ocrolus’ cash flow automation solutions for your lending business.