When You Should Transition to Financial Spreading Software

Posted by Fiscal on March 30, 2023

Transitioning to financial spreading software is a big step for community banks and credit unions. Before making the switch, they must consider need, benefits and cost. In our experience, banks and credit unions often decide to make the change when they see certain signs and experience specific challenges that, if not addressed, will negatively impact the institution’s business development.

One of these indicators is that the manual spreading process–often done in Excel–is taking too long and bogging down the pace of business. Another is spending significant time fixing spreadsheet errors, such as repairing broken formulas or broken templates. If you are encountering a lack of consistency from one loan officer to another, or even from deal to deal, that can be another indicator.

Signs You Should Switch to Financial Spreading Software

In this post, we’ll discuss the indicators that your bank or credit union is ready for financial spreading software and how that software can provide efficiency and reduce errors.

Slow Spreading Process

Excel is a valuable tool used by many financial institutions for statement spreading, but using Excel is a manual, cumbersome process. Data entry is time consuming, and becomes even more so when spreads are rife with errors and broken formulas.

Too often, the root of spreadsheet errors are not obvious upon first glance. A loan officer or analyst knows the result of a formula is incorrect, but there may be data in hidden rows, an edit to the formula formula itself, or changed data in a cell that inadvertently affected the formula. In some cases, loan officers will make a copy of a workbook, erase the spread data, and start working on a new customer, not realizing that there were deal-specific edits made to formulas in the original workbook. They are left hunting for the cause of the error, unsure of what changes were made, where, or why.

The very flexibility that makes it a great tool for spreading financials means that errors are bound to happen from time to time when using Excel for financial spreading. When this becomes a pervasive issue that’s taking loan officers away from pursuing new customers or other tasks that will grow the business, it’s a good indicator you’re ready for software that provides a number of out-of-the-box templates designed for efficient data entry.

Templates Aren’t Being Used By All

Excel doesn’t just slow down the spreading process through frequent broken formulas. It also leads to inconsistency and a lack of conformity to best practices. Whether a loan officer lacks confidence in the template being used, or they just don’t understand why it’s important, they commonly save their own “local copy” of the template. No matter how much time and energy you spend perfecting your template document or how regularly you review it, a simple Save As to a local copy means your users are no longer using the actual template you created.

A spreading software solution can help ensure templates are utilized and formulas stay intact. Each time a user opens a template, it will have the default settings. Loan officers are free to customize the rows and data in the template if needed, knowing their changes won’t accidentally alter key formulas. If an officer makes a change they no longer want, software like FISCAL Forward always gives you the option to revert to the baseline template.

Unsolvable Issues With Excel

At community banks and credit unions, employees are expected to save customer documents, spreads, and analysis to a common network drive or within a secure database. While this best practice helps ensure the documents are not lost, it is not 100% foolproof when it comes to maintaining data integrity.

The fact is, files can be deleted, or moved, accidentally. It could simply happen when a loan officer saves a spreadsheet in the wrong file location, unable to find it later. And sometimes, best practices are overlooked and files are instead saved on a local device, preventing them from being included in an institution’s backup routines and meaning any damage to the device could result in losing the files permanently.

With financial spreading software like FISCAL, banks have a single, secure database that cannot be bypassed by a user, and is included in an institution’s automated backup system, ensuring you can always restore to a prior version if a file is lost or corrupted.

Hiring Staff to Prevent Error and Increase Speed

Some banks have acknowledged the challenges of Excel for financial spreading and opt to create a system of dual control to reduce the number of errors that slip through. By implementing dual control, the institution brings on additional staff to double check the work done by loan officers and analysts.

While maintaining consistency and eliminating errors is important, the cost of hiring an analyst, which requires advanced skills, is significant and can be done more efficiently and for less with spreading software that prevents these errors in the first place.

Similarly, management is often concerned that loan officers are having to spend too much time creating, modifying, and checking spreads. Time spent double checking and troubleshooting errors is time not spent on business development and building the portfolio, reducing the ROI of each loan serviced.

Instead of waiting for an additional internal review, either by the loan officer or an additional analyst, community banks and credit unions can use the software’s capabilities–consistent templates, error alerts and automation–to get spreads right the first time.

Frequently missing key dates and deadlines

Annual reviews and loan renewals are time sensitive. Loan officers often create their own system of reminders to ensure these tasks are completed on time. If your institution is finding your current reminder system is lacking, it is likely time for financial spreading software.

When a bank or credit union fails to proactively alert customers of a maturing loan and the need for renewal in a timely fashion, it can negatively impact the relationship. No one wants to learn that their loan needs renewal only a few days or weeks before it’s due, or even worse, after it has fallen past due. The process of collecting the necessary financials and other documentation takes time, and it is not uncommon that “late notices” go out automatically (and unintentionally) for matured loans demanding payment in full and reflecting thousands of dollars in late fees.

Annual reviews are an important task to maintain the health of the institution, yet too often this task is put on the back burner to get to more pressing business. With financial spreading software, you not only get an automated system of reminders for annual reviews and loan renewals, but you also have automation that makes performing these tasks faster.

When interfaced with a bank’s core system, loan officers can pull information about the customer into a loan renewal or review memo, prepopulating key information that would otherwise take hours of manual data entry to create. Once one memo is created, customer information can be carried over from one to the next with one click, saving time copying and pasting.

Software Maximizes Efficiency

The decision whether to invest in spreading software is one where banks and credit unions must weigh the costs and benefits. Ease-of-use, automation and flexibility are all important aspects to review when adopting a new platform and considering potential ROI. After all, if the software is too complicated, doesn’t end up doing the tasks you need, or fails to save time, it’s not a savvy investment.

FISCAL Forward offers the structure you need to provide consistency and ensure loan officers and analysts don’t accidentally introduce errors into the spread, while also providing flexibility. The ability to make and clearly document adjustments, for instance, provides transparency and saves analysts time they otherwise might spend trying to track down where the numbers came from.

The greater accuracy and efficiency that comes from spreading software not only improves employees’ experience, it helps the institution thrive.

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