Why is bank data important for debt capital management?
Bank data is an integral part of two common debt capital operations: funding requests and reporting obligations. Funding requests are when a debt capital borrower submits a draw request, collections recycle request, or paydown request to their capital provider. Debt capital reporting is when a borrower certifies compliance with financial covenants or other rules in a credit agreement.
Sourcing bank data for these operations has traditionally been slow, manual, and error-prone. But with Finley's new bank data integrations, debt capital borrowers can automatically pull bank data into funding requests.
Finley's bank data integration capability automatically pulls in bank data from different financial institutions on an ongoing basis. This capability further streamlines and improves the accuracy of financial operations for borrowers.
Bank data is an integral element of debt capital management for two reasons:
Bank data is an input for funding and compliance calculations. When borrowers and capital providers agree to a debt raise, they execute a credit agreement, or contract, to formalize the terms of their partnership. Many terms defined in this credit agreement, such as the borrowing base and collections balance, are calculated based on the account balance of different borrower bank accounts.
Bank account balances need to meet certain requirements for capital markets operations to move forward. In a previous post, we explained how borrowers must be in compliance with certain financial covenants, such as a liquidity minimum, in order to maintain access to their credit facility.
Before Finley, debt capital borrowers needed to pull bank account balances manually each time they wanted to draw or report on a credit facility. This meant logging in to different financial institutions to view and manually export their bank data information to an email or XLSX spreadsheet in order to complete routine capital markets operations.
Because reports often needed to go through several rounds of review, bank data information was often inaccurate and/or outdated by the time the report was complete, which meant that borrowers needed to update all these fields several more times throughout the completion process.
Moreover, because there was no programmatic check of bank data against credit facility covenants, it was entirely possible for borrowers to trip financial covenants related to bank data without realizing it.
Finley’s bank data integration: streamlines routine borrower reporting tasks, increases the accuracy of capital markets calculations, and enables an “early warning system” for capital markets compliance triggers.
How does Finley's bank data integration work?
Finley’s bank data integrations allow debt capital borrowers to select their bank from a list of thousands of financial institutions and log in to create a data connection between Finley and the financial institution(s) linked to their credit facility operations.
This bank data connection enables borrowers to source key financial information for credit facility compliance and reporting without having to log in to different financial institution websites each time they conduct routine credit facility operations.
Because different credit facility operations are linked to different bank accounts (for a refresher, see this post on how fintech cash flows work), it’s also important for borrowers to be able to link specific bank accounts to specific account types. That’s why Finley also contains a page for assigning linked bank accounts to credit facility account types (e.g., a borrower's Parent Operating Account or Collections Account).
Importantly, users can add, remove, or update links to financial institutions at any time, which enables flexibility in financial data integration and configuration.
What financial institutions does Finley’s bank data integration support?
Finley’s bank data integrations support thousands of financial institutions, including traditional financial institutions like First Republic Bank and Wells Fargo, leaders in startup financing like Silicon Valley Bank, and digital banks like Mercury.
Want to learn more?
After businesses raise debt capital, they are often overwhelmed by the number of new processes and data handoffs that they need to implement internally in order to make use of their credit facility. One common example of this type of process is bank data management.
Keeping bank data up to date is a routine task that high-growth startups can automate by using credit facility management software like Finley. When it comes to tracking debt capital bank data and linking it to definitions outlined in a credit agreement, having programmatic access to source data is faster, more accurate, and less risky than existing methods of manual bank data entry.
For a full product overview, check out our Product page. If you're interested in learning more about software that can help you scale your capital markets function and ensure debt capital compliance, just request a consultation with a Finley debt capital expert and we'll be in touch with you soon!