Similar to identity theft, this type of fraud happens when an unauthorized individual gain access through online banking applications, capturing the account information to create and write bad checks.
Account-centric enterprise content management solutions allow users to access account holder information based on their account numbers.
ACH (Automated Clearing House) is an electronic payment network that enables banks, credit unions, businesses, and consumers to securely send and receive funds between accounts for transactions such as direct deposit, bill payments, recurring payments, and account transfers.
An adverse action notice is a document sent to a loan applicant stating a bank’s rationale for denying a loan. It may also contain a counteroffer, such as a lesser amount or a request for an approved co-borrower.
Agentic AI refers to artificial intelligence systems that can autonomously plan, reason, make decisions, and take action to achieve specific goals with limited human intervention.
The term “aging exceptions” refers to a group of critical exceptions that have not been resolved within a reasonable amount of time.
Altered check fraud occurs when a fraudster changes the amounts and Payee from a stolen check.
API is short for “application programming interface.” Technology companies like Alogent rely on APIs to connect multiple software applications, thereby enabling a two-way exchange of information to support users’ needs.
Audit and exam prep is a process that financial institutions go through in order to adequately prepare for upcoming audits and exams.
An authorized signer form is a document that allows an account holder to grant a range of clearance levels to individuals to perform certain functions within a bank account.

What are Credit Exceptions?

Credit exceptions occur when a bank or credit union expects to have certain credit-related documents but does not. 

For example, a community bank might require commercial customers to provide updated financial statements on a regular basis. Despite this reality, one of the bank’s customers failed to provide documentation by the requested date. In this situation, the customer’s missing financial statement would be referred to as a “credit exception.”

Why Monitoring Credit Exceptions is Important

Market fluctuations, competitive forces, and a variety of other factors can negatively impact an organization’s cash flow and financial performance—thereby reducing its ability to service existing debts. Monitoring the creditworthiness of commercial customers and members is an ongoing endeavor that helps financial institutions mitigate risk and ensure healthy, productive relationships. 

For example, a downturn in the housing market could make it significantly harder for a general contractor to procure construction contracts. The general contractor’s lender maintains regular correspondence and requests updated documentation, which allows it to understand how changing conditions are impacting the business and loan performance.

Documentation & Credit Exceptions

Requesting updated documentation from borrowers is one of the most common ways that financial institutions keep their finger on the pulse of customer's or members’ businesses. Loan policies usually specify which documents should be regularly monitored based on the type of loan. For example, a commercial real estate loan with a multi-year term will likely have different documentation requirements than an operating line of credit. However, generally speaking, financial institutions often request the following types of documentation for commercial loans:

  • Personal or business financial statements
  • Tax returns
  • Inventory lists
  • Accounts receivable statements
  • Rent rolls

Tracking & Resolving Credit Exceptions

Spreadsheets are a popular choice for tracking a financial institution’s credit exceptions. Creating and sharing spreadsheets requires minimal upfront cost but may involve considerable effort to ensure data accuracy and efficient reporting. Desktop tickler systems offer a more structured approach but can still lead to siloed exception data depending on the bank or credit union’s processes. Using a core-integrated solution, such as AccuAccount, can reduce manual data entry and increase accessibility to credit exception data.

Browse Additional Resources

Continue reading about exceptions or visit Alogent’s Innovation Hub for dozens of helpful resources, including case studies, videos, white papers, blog articles, and much more.

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