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Portfolio monitoring workflow: A credit manager’s perspective

21 May 2020

An Inside Look at the Technological Evolution of a Top Tier Private Credit Firm

Collecting, synthesizing and reporting financial and performance data has always been a critical component of the portfolio monitoring process. With information changing rapidly in this fluid environment amid the global COVID-19 pandemic, leveraging technology, services and a central data repository has proven to be crucial.

Honestly, how else is one team going to collect, scrutinize, standardize and report on the COVID-19 impact on a portfolio in a timely manner? Or get our arms around liquidity? Or assess the impact on revenue and EBITDA at our borrowers and flag potential financial, reporting and payment defaults? And do all this on top of an existing workload plus the inevitable restructures, amendments and new deals, while trying not to work 24/7?

The Manual Process

Back when I started my career as an asset manager, we collected and spread financial data the old-fashioned way - manually. We received reporting via emails with pdfs attached, which were shared to a structured folder to facilitate easy navigation by all team members. We set email calendar reminders to track reporting due dates and prompt the immediate chase of a late report, if needed. This was sometimes the first sign there was a problem.

My team was responsible for reviewing the borrower reporting, keying in the relevant financial performance data, calculating KPIs, performing variance analysis, providing a qualitative write-up and standardizing all of this into a template for a monthly or quarterly "one-pager" or "tear-sheet" review. We also used this reported financial information, together with the most recent market data, to perform valuations each month. It was fast paced, exciting and a substantial amount of work to complete in a short period of time to meet monthly accounting deadlines and strike NAV.

Calendar quarter ends were particularly busy with the release of 10Qs for comparable public company benchmarking, updating valuation reports and coordinating with external analysts to share information and obtain positive assurance from external valuation providers. Data accuracy and thoughtful analysis of information from various sources were critical to succinctly consolidate the updated information for the investment team to review and make informed decisions.

Furthermore, gathering and applying real-time market data was central to our valuations and reporting because identifying the comparable public companies and analyzing how their key financial ratios change period over period would affect our risk rating and valuation conclusions. For example, assessing the expansion or contraction of the fundamentals of a specific industry and determining the relevant impact on a specific borrower takes time for thoughtful analysis and discussion. Generally, the process requires preparation of a draft valuation that includes information review, data entry, adjusting financial models and, finally, explaining the thought behind the conclusion to multiple stakeholders (i.e. portfolio managers, valuation committee, etc.), taking into account market conditions, economic factors, company specific metrics, industry metrics, etc. It is a lot of data to gather, synthesize, add into a memo and deliver to stakeholders.

The Automated Workflow

Fast forward to the use of technology to improve and streamline this whole process. Imagine this: borrower-reported financials delivered directly into iLEVEL, our portfolio monitoring platform - with NO DATA ENTRY REQUIRED; an Excel plug-in to automatically update tear sheets, one pagers and valuation models. Without the manual data entry, I have completed these updates in record time and can now spend time on research, analysis, restructures, underwriting new deals - value added, stimulating work! And everyone benefits because my team delivers our reports in a timelier manner. The iLEVEL solution is so well thought out that it enables my team to scale, while still being solid on our analysis (maybe even more so now because we no longer need to review constantly for fat-fingering into a spreadsheet). It is as if we wrote the code or designed it ourselves. Let me break it down…

  • First, once a borrower sends in their required reporting package, we pass the information to a trusted managed data service to put into a database and present the exact information that the client reports into iLEVEL. Rather than manually transferring the information from a pdf to my spreadsheet model, my review process begins once my borrower's financial statements are in the system.
  • Second, there is an Excel plug in. Genius! Once I review the information (i.e. variance analysis, compare to prior year, plan, prior period, review updated KPIs etc.), I simply go to the spreadsheet and refresh the "as of date" to tell the spreadsheet to populate my templates with the updated data and let the magic happen. Then, given the flexibility of the spreadsheet, I make notes and adjustments based on additional analysis / research that I have performed and finalize my recurring reports with ease and efficiency.
  • Third, iLEVEL connects to our accounting platform so I no longer wait for the back office to send me a spreadsheet of my par balances and any accruals. Instead, the information is automatically updated in our software platform and connected to a spreadsheet with a simple formula via the plug-in. If I want to come in at 5am and complete my reports so I look like an overachiever to my PM who has told me he prefers to have the reports as early in the day as possible, I'm not waiting on a report of this data from the back office - it is literally available at my fingertips!
  • And fourth, once all the updated information is in iLEVEL, it is a reliable database with pre-set and customizable dashboards so that anyone across our organization with permissioned access can drill into a borrower, review performance across a portfolio and look at time series analysis from a computer or mobile device.

The time savings and process improvements with portfolio monitoring technology solutions pave the way for more value-add, productive analysis powered by accurate, transparent and thoughtful reports for our leaders to make well-informed decisions, expediently.

In today's environment where the COVID-19 pandemic is hitting the global main streets, time is of the essence in many ways for critical decision-making on our existing portfolio and on new deals that will likely produce out-weighted returns for our investors given the market dislocation. Without the benefit of portfolio monitoring software to keep everyone up to date, our firm would be at a disadvantage to our competitors.

To learn more about how your firm can simplify workflows and increase efficiency, visit our website or email

IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

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