In our digital age, financial institutions must facilitate swift and effortless business loan approvals, where lenders can make decisions without subjecting clients to lengthy delays. Fortunately, this is achievable through the use of financial spreading software, which not only expedites decisions but also reduces costs.
Let’s dive into how financial spreading technology provides value to both financial institutions and their accountholders.
How Financial Institutions Can Use Financial Spreading Software
Financial spreading automation stands as a groundbreaking technology for financial institutions, streamlining the conversion of scanned tax returns into comprehensive financial reports and analysis while decreasing the need for manual labor.
What Are the Benefits of Financial Spreading?
Financial statement spreading presents a host of advantages for businesses. At its core, spreading financial statements provides a comprehensive and up-to-the-minute assessment of a potential borrower's financial performance, contributing to more effective risk management and decision-making.
Furthermore, financial statement spreading empowers businesses to uncover long-term trends and recurrent patterns within a potential borrower's financial performance.
Financial statement spreading also stands as an invaluable asset for businesses, equipping them to render decisions about financial transactions with enhanced insight and precision. It not only economizes time and curtails costs but also assists in pinpointing concealed risks and untapped opportunities, which might elude superficial scrutiny.
Advantages of Financial Spreading
Reduces Mistakes
Manual spreading often introduces a higher risk of errors. According to a study by the Financial Accuracy Institute, manual data entry and analysis can result in an error rate as high as 10%. These errors can be costly and time-consuming to rectify.
However, the implementation of financial statement spreading significantly mitigates this risk. By automating the process, it reduces the error rate to a mere 1%, as reported by the same study. This reduction in errors not only saves time and resources but also provides a more accurate and reliable view of a company's financial position, thereby enhancing the decision-making process.
Guides Important Lending Decisions
Lenders can make more informed decisions when determining whether to grant business loans or other services. This is achieved by conducting a thorough assessment of a company's financial standing. When financial institutions opt not to lend, it benefits the accountholder as well. The financial institution can promptly communicate this decision to the potential client, enabling them to swiftly explore alternative options. This approach ultimately creates a mutually advantageous outcome for both parties.
Reveals Short- and Long-Term Performance
Financial institutions strive to maintain up-to-date portfolios, and continuous financial spreading now offers real-time insights into portfolio performance. By regularly spreading financials, you can gain valuable short-term assessments of a business's performance. Furthermore, it allows you to evaluate a company’s ability to meet its long-term commitments by generating comprehensive financial reports that ensure accurate recording of all transactions within the company.
Digs Deeper Into a Company’s Finances
Banks and credit unions can learn a lot about a borrower’s financial situation and how reliable they are by comparing starting and ending balances. This helps figure out how well the business is doing over time, and how much money it might need to support its growth.
Shows the Money Flow
Cash flow statements play a pivotal role in financial statement spreading. They provide insights into the inflow and outflow of money resulting from a company's operational, investment, and financing activities. Spreading these statements enables lenders to gauge a company's financial management and identify potential cash-related issues.
What Financial Spreading Automation Can Do for Lenders
Quick Tax Conversion
Efficiency is at the core of quick tax conversion. With a mere click, lenders can seamlessly convert scanned tax returns into precise digital financial statements. This streamlined process not only saves valuable time but also significantly reduces the margin for human error, ensuring the accuracy of the financial data.
Swift Credit Assessments
The ability to make swift credit assessments is paramount in today's fast-paced financial landscape. By leveraging the power of modern technology, lenders can instantly identify deals that fall short of the minimum lending requirements. This not only expedites the decision-making process but also safeguards your institution from risky lending ventures.
Enhanced Deal Selection
In the ever-competitive lending landscape, deal selection is critical. Lenders can hone their focus on underwriting pre-qualified deals, increasing the likelihood of successful outcomes. This strategic approach not only maximizes your lending efficiency but also minimizes the risks associated with underperforming loans, resulting in a more profitable lending portfolio.
How Can Financial Institutions Calculate ROI?
In assessing the impact for your financial institution, let's break this example down by the numbers to see how financial spreading software can streamline your operations and boost cost-efficiency:
- Monthly Deal Spreading Volume – Typically, you're dealing with a considerable number of deals each month. In this example, let's say it's about 20 deals.
- Hours Spent Annually on Spreading Deals – Before implementation, you or your team spent a substantial 1,512 hours each year manually spreading deals. That's equivalent to 41 work weeks!
- Average Number of Tax Returns Per Deal – On average, there are about nine tax returns in each deal.
- Time Spent Spreading a Single Deal – In this example, it took you, on average, 42 minutes to manually spread a single deal.
- Time Saved – You can experience a remarkable reduction in the time spent, estimated at a significant 1,471 hours saved annually.
- Total Annual Files Spread – This comes to a total of 2,160 files annually that have been streamlined and processed more efficiently.
- Cost Savings – Now, for the most compelling part – the cost savings. With all these time efficiencies, you would be saving a substantial $63,262.
This breakdown illustrates just one example of how technology can not only save you valuable time, but also translate to significant monetary savings while enhancing the overall efficiency of your operations.
In Conclusion
As the industry constantly evolves, making substantial adjustments in its operations to reduce costs and enhance efficiency, now is the ideal moment to embrace a financial spreading system that can cater to your unique needs. Take action today and explore how an integrated, tailored financial spreading solution, can revolutionize your financial institution's operations.
About our guest author: Veronica Nguyen is the co-founder and executive vice president of BeSmartee, a leading lendtech firm that offers FlashSpread, a powerful financial spreading solution that converts scanned tax returns into comprehensive financial reports and analysis with little to no human interaction.
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