What is Credit Administration?
In banking, credit administration involves managing the necessary information and requirements for extending credit to borrowers. Implementing sound credit administration practices is key for informing lending decisions and managing risk, especially for commercial relationships.
Banks and credit unions commonly employ “credit admins,” who are responsible for the day-to-day aspects of credit administration. Financial institutions with smaller commercial portfolios have been known to combine credit and loan administration into a single role.
Keeping Commercial Credit in Good Standing
Credit admin teams perform a variety of tasks that ultimately relate back to understanding borrowers’ creditworthiness.
Gathering Credit Information for Approvals: Commercial credit analysis cannot occur until the borrower’s documentation has been acquired. Credit admins identify documentation needs based on loan type, obtain the required documents, organize information in a logical format, and share files with analysts and underwriters.
Tracking Borrower Covenants: Loan agreements regularly include covenants, which hold borrowers to certain conditions. Such conditions often pertain to the borrower’s creditworthiness. For example, a covenant might require specific debt-to-income levels while prohibiting unauthorized investment activity.
Monitoring Documentation Exceptions: Commercial borrowers may be required to provide updated financial information on an annual, quarterly, or custom schedule. Maintaining a clear understanding of what should be provided by whom (and when) is the first step toward avoiding credit document exceptions.
Following Up with Borrowers: Some customers or members are quick to respond, while others require multiple points of contact. Consistently following up via email, mail, and, in some cases, phone calls or in-person meetings may be required.
Resolving Credit Exceptions: To avoid confusion caused by inaccurate reports, credit admins must promptly resolve exceptions as documents arrive. Ensuring fresh, reliable exception data is time-consuming when manual tracking techniques are utilized.
Credit Admin & Document Management
Over the course of a single year, one credit admin could potentially collect thousands of pages of tax returns, financial statements, inventory lists, and AR statements. Each document must be organized in a way that satisfies exceptions, empowers analysts and underwriters, and complies with record retention policies.
Efficient document management is a key enabler for credit administration. Alogent’s ECM solutions align with the unique document management needs of credit admins. With Alogent Document Portal, credit admins can securely request and collect documents from applicants and borrowers. Managing credit files in AccuAccount streamlines document imaging, exception tracking, audit prep, and document retention.
Contact us to explore Alogent’s ECM solutions or browse more banking definitions.
