Case Study

Genpact helps an inventory financing firm streamline its financial spreading process

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A global inventory financing firm with net earning assets of $15 billion and a network of 40,000 dealers across geographies

Banking and financial services

Business need addressed:
Standardized financial spreading process to ensure optimal performance and covenant compliance

Genpact solution:
Genpact created comprehensive spreading guidelines as well as a process to ensure timely updates of financial documents and data for analysis

Business impact:
Faster cycle times and lower costs: The client improved its data accuracy to 99 percent, increased its capacity by 35 percent, cut processing time by 40 percent, and reduced its backlog from 22 percent to 5 percent. The Genpact solution also freed account managers to spend more time on their primary mission—customer relationships

For this major provider of inventory financing services, credit risk management and credit decisions are paramount concerns. Making the right credit decisions poses a complex challenge for the firm, and it becomes even more complex against a backdrop of 40,000 dealers, diversified products for various industries, and evolving regulatory guidelines.

Business challenge

The inventory financing firm realized that the existing disparate methods of financial spreading—collecting, spreading, and analyzing financial statement data—were inefficient and exposed the business to higher risk. Some of the major challenges for the inventory financing firm were:

  • Data inconsistency
  • Increased processing time
  • More training time and flatter learning curves
  • Higher defects
  • Insufficient capacity utilization
  • Reports that used inconsistent definitions, which made comparisons and analyses of aggregations difficult or impossible
  • Customer analysts had no systematized process for obtaining the right financials at the right time from the right borrowers

What’s more, due to a heavy workload and short staffing, the financial services company faced a financial spreading/database maintenance backlog of more than 4,500 customers. Without proper and timely analysis of these thousands of clients, the company was facing a significant risk exposure and didn’t know if its customers were complying with loan covenants or becoming credit-unworthy.

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To address these challenges the firm needed an efficient financial spreading system—one characterized by standardized and fully integrated processes, appropriate governance, and a complete and efficient supporting information system.

Genpact solution

Genpact analysts assessed the financial spreading processes to gain a thorough understanding of various stages and customer touch-points. The assessment concluded that decentralization of spreading practices and business-unit silos led to inconsistencies from account to account.

Based on their findings, Genpact consultants created a best-practices roadmap for the new financial spreading system, which allowed the team to bring consistency in financial spreading through:

  • A comprehensive set of spreading guidelines that defined the data the client needs from its borrowers
  • Verified quality of financial statements that meet all requirements of the loan agreements and credit policies
  • Stronger maintenance of the portfolio database with updated financial information
  • Updated triggers and submission of data to underwriting for further follow-up
  • Identification and documentation of exceptions—the line items that are being treated differently
  • Analysis and assessment of flow-in report generated by the software platform

The new system was rolled out with two full-time equivalent teams and, over a period of about 20 months, and was ramped up to handle greater volumes of spreading analyses. The analyses and credit reviews included covenant monitoring, due diligence, inventory operational performance analysis, data quality scorecards, and risk scorecards.

Business impact

The standardized financial spreading processes generated the following business impact for the firm:

  • Data accuracy improved to 99 percent
  • The capacity of the spreading team increased 35 percent on an annualized basis
  • Processing time decreased by 40 percent
  • The backlog of client analyses declined from 22 percent to 5 percent in just the initial phase of the program

The success of the program has resulted in its implementation in eight more sub-business units. Today, a 46-member team performs financial spreading on thousands of borrower-customers from around the world.

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