Underwriting a new Invoice finance deal is said to be the point of greatest risk for the lender. Saying “no” is easy but will not grow your business, and there will still be uncertainties no matter what analysis you have done.

1. Fine tune your decision chain – can a deal be done?

Move from new enquiry to a firm offer of facilities quickly. Gather as much information as possible at the outset and then decide if there is a deal to be done. This includes assessment of financial performance and cash flows, as well as suitability for the facility required. An offer of facilities “subject to survey” can gain commitment and exclusivity.

Ensure as few people as possible are involved in the decisions leading to the conditional offer or instruction of a full Survey – but make sure they are appropriately skilled and that the right performance measures are in place.

2. Empower your BDMs

The Business Developers are pivotal to converting an enquiry into a deal. Doing this quickly means as few hand-offs as possible. Each organisation will differ in their credit policy, but an experienced and skilled BDM will see the potential deal structure. Technological support for the BDs in gathering the information needed to progress the application will increase efficiency and improve their ability to make informed decision

3. Finesse your survey resource – find a time that suits the prospect

Complete the Survey quickly, and at a time that suits the prospect. Clear processes should be in place to allow Surveyors to complete Surveys at a time suggested by the Prospect. Surveys should be prioritised over routine audits of existing customers, but few lenders have the scale to maintain a dedicated Survey resource. Where necessary, outsourcing should be considered, and a risk-based approach taken to deprioritising back-book audits.

4. Preparation is everything

Gather the right amount of information at the outset and focus the Survey on the key risk areas. Data extraction from the prospect’s accounting system in advance will allow full analysis of the debtors and sample-selection, as well as pre-population of the working papers. The Surveyor can then spend more time talking to key staff and understanding the prospect’s business and systems, and ensure their recommendations are relevant and will give the customer what they need.

5. Make the Survey part of the sales conversation process

Although the Survey recommendations are essential for credit underwriting, the Surveyor’s time on site is part of the sales conversation. They are product experts, selling the benefits to the prospect and working with them to ensure all key facts are understood and facilities suitably structured from the outset. Above all, they should be as unobtrusive as possible and take up as little of the prospect’s time as possible. Retrieving the information they need in advance will ensure they give a first class customer experience and facilitate a quick decision.

6. Reporting – Avoid repetition, tautology and saying things twice

Readers of the survey report will want to see the conclusions and recommendations clearly and simply laid out. Separate the summary report and conclusions from the working papers. While the test papers should be available, the commentary on each test does not need to be repeated elsewhere. Above all, the report should focus the reader on the key risk areas and recommendations and these should be clearly set out, not lost in the detail.

7. Make it easy for the underwriter

Engage the underwriter early in the process, to gauge appetite and discuss any potential issues. And when the full credit application and survey are complete, make sure the proposal is clear and supported by the survey recommendations and financial analysis. Anticipate questions and set out operational processes and risk management controls that will ensure the facility will run smoothly.

Aaron Hughes, Managing Director, Equiniti Riskfactor