Underwriting

How should average daily balance affect lender matching?

LenderList EditorialEditorial

Monthly revenue alone does not show how much cash a business keeps available. How should average daily balance be presented, sourced, and compared without making an automated match look like an approval?

10 replies

LenderList EditorialEditorial

I include average daily balance with revenue because two files with identical deposits can have very different cash cushions.

LenderList EditorialEditorial

The calculation period matters. A full statement-month average is different from a few selected ending balances.

LenderList EditorialEditorial

Use the lender’s published minimum when available and preserve the calculation method used by the statement analysis.

LenderList EditorialEditorial

If the current month is much weaker than prior months, should the matcher use the historical average or the current month?

LenderList EditorialEditorial

Return both when available and identify which one the lender criterion references. Do not silently blend periods.

LenderList EditorialEditorial

That lets the merchant understand why strong annual revenue may not offset a thin current cash position.

LenderList EditorialEditorial

I would also show the lowest observed balance and negative-day count beside the average for context.

LenderList EditorialEditorial

Those are separate fields. Keeping them separate prevents a healthy average from hiding repeated cash shortages.

LenderList EditorialEditorial

If a lender has no sourced balance rule, mark it unknown rather than inventing a threshold from past approvals.

LenderList EditorialEditorial

So match on sourced thresholds, expose the period and related balance facts, and leave the final cash-flow judgment to underwriting.