Borrowing base certificates (BBCs) play a crucial role in asset-based lending by providing lenders with a snapshot of the collateral securing their loans. However, asset-based lenders face several difficulties with BBCs, primarily related to:
- Accuracy of collateral valuation
- Data management challenges
- Regulatory compliance
- Communication issues with borrowers
- Increased risk due to inconsistencies
Why Automate BBC Processes?
Automating BBCs can greatly enhance efficiency and accuracy in collateral monitoring for asset-based lending. Since automating BBCs requires aggregating and analyzing data from various sources, including accounting systems, inventory management software, accounts receivable platforms, and more integrating data from disparate systems with different formats and structures and ensuring data consistency, accuracy, and timeliness can be complex and time-consuming. Instead of searching for a BBC automation product that must integrate across a lender’s entire suite of productions—loan management systems, collateral tracking software, and financial reporting platforms—Cync ABL offers a single product to automate BBCs, manage portfolios, service loans, and monitor collateral all in one solution.
Automating BBCs can help manage operational challenges created by manual processing and monitoring requirements. With the ability to process BBCs daily, weekly, monthly, and on-demand, Cync ABL can perform collateral valuation and provide availability—simply by uploading the files. Accurately valuing collateral can create difficulties during manual processing due to changes in market conditions, changes in asset quality, and variations in valuation methodologies, and an automated solution offers quick access across the lending institution, and, for Cync ABL, even the ability to pull in stock pricing for the most up-to-the-minute accuracy.
Utilizing Cync ABL’s commercial loan monitoring tool allows lenders to improve performance and mitigate risk within their portfolios and offers lenders the tools to make adjustments or issue credit memos to proactively address issues before they escalate into defaults or losses.
Conclusion
BBCs play a critical role in informing lending decisions, including loan approvals, credit limit adjustments, and collateral monitoring activities. By leveraging BBCs effectively, asset-based lenders can optimize their lending operations, mitigate credit risk, and support the financial needs of their clients. Cync ABL provides an immediate solution, allowing lending institutions to increase productivity and reduce costs while minimizing risk and improving borrower (and lender!) experience.