Global commercial finance enterprise
Banking and financial services
Business need addressed:
Revenue leakage, high booking error rate
Implementation of standard templates for loan contracts and introduction of check list tool and booking audit process
- Plugged annual revenue leakage of $25 million
- Increased booking accuracy from 60% to 88%
A leading commercial finance enterprise faced challenges in its asset based loan originations process due to a lack of standardization. This resulted in a high booking error rate, significant revenue leakage, and higher operating costs. Genpact was engaged to standardize the booking process and to plug the revenue leakage.
- Lack of standardized loan contracts
- Inconsistent terms and conditions of loan contracts leading to revenue leakage
- High booking error rate (~40% defects)
Genpact performed detailed audit of a small sample of active deals and identified the income opportunities that were lost at various stages through the deal life cycle.
As a result, Genpact determined:
- Clauses were missed due to lack of clarity and communication stemming from business waivers
- Booking errors were prevalent in the system
- Certain fees were incorrectly charged due to oversight and lack of understanding, or waived without documenting formal approvals
Due to the enormity of the findings, an audit of a larger sample was done and a structure was created to identify the various stages where revenue was being leaked, to coin measures to plug leakage at the identified critical junctures.
- Standard templates for loan agreements were formed through cross functional involvement to clear ambiguity around clauses and the approvals required to waive fees
- A checklist tool was introduced that helped analysts improve accuracy during the booking process
- A booking audit process was created to ensure continuous improvements in the booking process
The revenue leakage identified for the sample, when extrapolated to the population, amounted to $25 million. However, as the legal clauses did not permit the client to recover beyond the previous quarter, it was able to recover to the extent of $4 million and took measures to plug all the leakages that would otherwise be possible going forward.
The standardized loan agreement templates and redesigned audit process increased the booking accuracy from 60% to 88% and reduced the associated operating costs.