Financing decisions rely on accurate information about the assets and activity behind a portfolio. For lenders using borrowing-base facilities, that information helps determine how much they can borrow against eligible collateral. Servicing records and portfolio activity contribute to those assessments.
Timeliness matters, too. Gaps or delays can leave lenders working with an incomplete or outdated view of the portfolio when capital decisions need to be made.
Andrew Coffey, SVP, Enterprise Sales & Partnerships at Concord, sees a direct connection between frontline servicing work and financing decisions. At the Auto Finance Capital Markets Summit, he joined treasury professionals in discussions about data, reporting, and the role of servicing operations. One point stood out: the people entering information into servicing systems need to understand how others will use it.
“People entering information into a servicing system need to understand how that information will be used downstream. Without that understanding, capturing reliable data becomes much more difficult.”
For lenders working with third-party servicers, the reliability of those calculations depends partly on how information is captured during routine servicing activity.
Some of the information used in borrowing-base calculations originates in day-to-day servicing activity and flows into portfolio reporting. When account information is incomplete or inaccurate, those errors can carry into subsequent reports unless someone identifies and corrects them. By the time a lender reviews the figures, the problem may already be embedded in the reporting.
Andrew sums up the risk: “Garbage in, garbage out.”
Borrowing-base calculations depend on the information used to assess eligible collateral. If servicing records contain errors or fail to reflect changes in account status, lenders may get an inaccurate picture of the collateral available under a facility's terms. Depending on the error, borrowing capacity could be overstated or understated, even when the calculation itself is correct.
Timing creates another risk. Accurate information can still be misleading if it reaches a lender too late to reflect the portfolio's current position. Andrew specifically raised the possibility of a business having access to too much capital or falling short of what it needs. He connected that risk to servicing delays that go unreported or uncommunicated to the client:
“Delays on the servicer's side can be detrimental to the overall success and continuity of the business if they aren't captured and communicated to the client.”
Lenders therefore need to know whether the reports they receive reflect the portfolio's current position and whether the servicer communicates delays that could affect their decisions.
Assessing a borrowing-base report also means understanding the processes that produce and maintain the information behind it.
Lenders should ask how the servicer captures the information required by a facility and carries it into portfolio reporting. Who is responsible for entering that information, and how does the servicer maintain its accuracy and timeliness as account activity changes?
When information is missing, inconsistent, or inaccurate, lenders should understand how the servicer investigates the problem and corrects the underlying records. How does it track unresolved issues, and how does it confirm that corrections appear in subsequent reports?
When a report is delayed or a discrepancy remains unresolved, lenders need to know what information may be affected and when they can expect an update. How does the servicer notify clients, explain the issue, and communicate its status while the problem remains open?
Borrowing-base decisions depend on information generated well before a lender reviews the final calculation. Looking upstream at servicing operations helps lenders assess the reliability of that information and identify where errors or delays could affect their view of a portfolio.
For lenders seeking an independent check on collateral eligibility and borrowing-base calculations, Concord's Borrowing-Base Verification services provide a relevant next step.
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