CMA (Credit Monitoring Arrangement) Data is a very important document which a lender mandatorily asks for from the borrower, whenever it intends to sanction a new loan / renew an existing credit limit / during takeover or there are important developments / update happening in a company.

‍

CMA Data basically provides a detailed Historical & Projected Financial Statements (Income Statement, Balance Sheet, Cash Flows, Fund Flows, Working Capital, Ration Analysis, etc.) about the borrowing firm so that the lender can take the decision of how much limit to sanction and at what terms.

‍

Moreover, the Bankers also reviews and compares the past CMA Data to cross check whether the borrower has been able to perform in line with what was projected earlier.

‍

Hence, CMA Data is a very crucial document to extract a good deal from the lenders. Accordingly, the same needs to be prepared properly with full details and complete justification since lots of queries from the Credit / Risk Committee flows from the CMA Data itself.

‍

For a normal MSME borrower, preparing a CMA Data is a nightmare. They or their staff are not equipped enough to prepare a well-defined CMA Data and even if they try it takes a lot of their time, effort and energy ~ thereby compromising their other areas of work.

‍

It is in this situation, that your friend “BankKeeping” comes to rescue and supports you to prepare well designed CMA Data that shall meet the needs of the Banker – and that too in a very prompt manner.

Drawing Power (DP) / Stock Statements is a document which every borrower (having Cash Credit limit) needs to submit on monthly basis to each of its lender consistently without fail – within 10-15 days of the end of the month. Not submitting timely attracts penal charges for sure.

‍

By virtue of DP Statement, the lender is able to ascertain how much working capital (within the overall sanction limit) need to be released for the current month – so that there is no overfunding.

‍

As a thumb rule, bank always desire that about 25% funds which are blocked in Debtors and Inventory (net of creditors) are met from Promoter’s own contribution (technically called Margin Money). And Banks lend for the balance working capital (i.e. ~ 75%). This % margin varies for inventory & debtor and may vary from client to client depending upon the nature of the business.

‍

At times, even there is further carve out in Sundry Debtors – where Banks do not fund at all any debtor beyond a specific cover day (say 90 days). Thus, all debtors beyond cover period have to be mandatorily funded through promoters’ own sources.

‍

The banks will thus fund every month max upto the amount of working capital gap less promoter’s margin. And in case, if it has already funded more than that, the bank shall ask you to refund the excess immediately.

‍

Hence, it is imperative that the DP statement be prepared & reviewed properly in advance before submitting it to the lender(s).

Most of you will agree that it is quite painful and difficult for an MSME owner or even his / her team members to read through a bank’s sanction letter properly, search for the relevant clauses or keep a tab on important points which he should be aware of. Thus, many a times this gets ignored and the client is unable to comply with the terms of sanction which unfortunately leads to levy of penal charges, etc.

‍

However, with BankKeeping – the above problems get very easily addressed and you shall be able to see, understand & review all the important clauses of a bank’s sanction letter in a very friendly and easy manner. You / your team need not spend your time & efforts in searching & understanding those crucial terms of sanction.

‍

BankKeeping filters the bank’s sanction letter, removes the noise and shows you only what is relevant for you.  This shall broadly cover the following areas:

‍

● Credit Limit Structure – Types of various credit limits / sub-limits sanctioned together with associated restrictions, if any.

● Pricing - Is the interest rate fixed or floating? What is the benchmark / reference rate used for pricing?

● Interest Reset period – Does the interest rate gets reset even before the annual renewal. If yes, when and how? This directly impacts what interest rate will be charged on month-on-month basis.

● Committment Fee – These are levied in case utilization of limits falls below a certain threshold.  One needs to be aware of that as well.

● Security - These are predominantly of two types - primary security (main assets which are funded directly by banks) and secondary security (other collaterals offered) – together with what type of charge the specific lender has on these security (first charge / second charge / subservient charge)

● Guarantee – Details on the personal & Corporate guarantee provided to lenders and to what extent.

● DP Parameters – Easy access of working capital margin %, cover period of debtors, etc. so that the DP Statements can be properly prepared and reviewed before submitting to Banks.  

● Covenants – Real time tracking of various Financial Covenants so that this does not get breached and corrective remedial measures taken in advance, if needed. Else, these remain largely ignored.

● Prepayment Penalty – to understand how much one has to pay in case loan is terminated early and the manner of its calculation.

● Various fees – Single consolidated place where one can know what all types of fees, their rates, etc. are applicable on the borrowing firm.

It is said “what is written, gets done”. We firmly believe in this adage and follow it religiously. Hence, we have designed a calendar called Banking Compliance Calendar which boasts of a lot of special features – as elaborated hereunder:

‍

● The Calendar shall highlight all types of banking tasks that needs to be done (Bank wise) with specific date mentioned.

‍

● This also clearly depicts various daily, weekly, monthly, quarterly, half yearly and even annual tasks – which needs to be completed within the set deadline.

● Cushion is built on the timelines so that none of the banking compliances gets missed. This in turn ensures better credibility in the eyes of lender and thus avoiding any penal charges for non-compliance.

Most of the time, an MSME Owner and / or its team members are struggling to find their own firm’s documents because these are not stored properly at the right place. Consequently, this eats away lot of precious time in the process. Moreover, with people travelling across the globe, the need to access own important documents (24 X 7) cannot be undermined. They may require the documents even when their own offices are closed (say during early morning or night time).

‍

Hence, we have come up with a solution wherein we are providing 24 X 7 access of all their banking related documents & information - in a secured cloud environment (with AWS). These shall be accessible only to the restricted people who have been authorized to have it.

Proper communication goes a long way in developing relationship with anyone and also is a very effective tool to get your work done in the best possible manner. Writing an email / letter to lender(s) and informing them about your request / concern (together with justification) is an art and needs to be properly done. However, it has been observed that for an MSME owner & its staff, this is a nightmare. They struggle to write in proper English, with strong justification / supporting and hence have to compromise on their request, at times. Moreover, this also is quite a time guzzler for them.

‍

Thus, to alleviate this problem of MSMEs – we have come up with a unique concept of Letter Writing Template. This template contains a huge Library of various types of sample letters a borrower needs to send to the lender in course of their journey. Such template is already ~90% complete as far as the letter is concerned. A borrower just need to pick up any of the template, as per their need at that moment, make requisite changes by way of filling up few blanks (like name, amount, date, etc.) and eureka – the final letter is ready, in no time.

‍

The final version can then be printed (with / without letterhead) and can be signed and submitted to the lender.

The above Communication Template thus play a crucial role in delivering out proper well drafted official letter in no time and thus gets work done much faster.

We have all experienced that we remember a particular task and if we don’t delegate / take care of it at that moment, we, at times, forget about it and thus the completion of that task gets delayed.

‍

Hence, to mitigate this risk – we have come up with a very easy & simple solution by way of which the client can delegate any banking task to BankKeeping by way of few simple clicks / email / phone. This can be done 24 X 7 from anywhere across the globe. And as soon as the task is raised, the clock starts ticking and the work needs to be completed within the prescribed deadlines.

‍

Moreover, people can see the real time progress of each of the task allocated - as against planned timeline. They can also see who is the person responsible to do a particular portion of the task so as to easily identify bottlenecks (if any) and resolve it speedily.

‍

Following the principle of “Management by Exception” – we have categorised various tasks into the following sub-categories for convenience of all. The idea is that the user should be able to focus on what’s important at the moment.

‍

● Overdue Tasks – Tasks whose due date has expired and yet to be completed. This becomes urgent priority.

● Critical Tasks – Tasks whose due date is tomorrow (T+1) – so that steps are taken to complete within the prescribed timelines.

● Other Tasks – Tasks which needs to completed little later (after T +1 days).

● Completed Tasks – All those tasks which have already been completed and delivered.

Annual Renewing of Working Capital Limit becomes a daunting task for many of the MSME owners. They need to prepare & submit lot of documents to Bankers like CMA Data, Provisional Financials, Limit justification note, answer various queries on what all went wrong & why in the recent past, what are their plans for future and how do they intend to achieve them, etc. Adding to this – if there is a requirement to enhance the limit, this makes the job all the more difficult.

‍

BankKeeping comes to the rescue during this period by understanding, preparing, reviewing and submitting all the information needed by the Banker, well in advance – in the best possible manner. The promoter & his team largely focus on their business and BankKeeping takes care of the entire renewal process. Of course, the management needs to be there during meeting with Bankers. The enhancement of limit comes under premium services which is charged at subsidised rate.

‍

Broadly, the work involved during this exercise includes:

‍

The work starts from submitting the required information initially. It then involves lot of other activities like:

● Preparing & submitting the CMA Data

● Preparing a Snapshot of how was the previous year, present position and plans for future

● Explaining our Present Ask during renewal – with proper reasoning & justification

● Properly replying to all the queries raised by the Credit & Risk Team

● Coordinating & Getting Due Diligence done in the best possible manner.

● Negotiation to Improve the Terms of Sanction (wherever needed)

● Review of Draft Sanction Letter

● Explaining the implications of all the clauses & sub-clauses to Promoter before accepting the Final Sanction Letter

● Ensuring modification to terms (wherever needed)

● Acceptance of the Sanction Letter

● Facilitate in complying with Pre-Disbursement Conditions

● Finally, ensuring receipt of Funds

We understand the importance of relationships and ease of communication. Hence, we shall ensure that a Dedicated Relationship Manager from BankKeeping will be at your disposal – who shall be a single point of contact to address all your queries, liaison with you & your team for all information / documents.

‍

He shall act on your behalf and push things within the BankKeeping system to see that all your work is done in the best possible manner within the prescribed deadlines. He shall be available at all points of time and will be one phone call away.

Whenever a borrower avails any loan from any Banks / Financial Institutions – it is mandatory that a Charge needs to be filed by the Borrower in favour of the Lender(s) with the Registrar of Companies (RoC).

‍

By virtue of this, the Lender(s) secures better rights over the securities offered by the Borrower - which could be various assets / properties or any of its undertakings, present and future.

‍

This become pertinent in case the company is unable to repay its loan and has to go for liquidation. In such cases, the interest of the Lender is protected if the Charges are properly filed with RoC. Hence, Banks always insist to file this charge document either as a pre-disbursement condition / sometimes within a certain timeframe.

‍

At times, due to enhancement of credit limits or takeover from one bank to another – these charges need to be modified so as to keep it updated with the latest developments happening at borrower’s end.

‍

Moreover, in case the loans are repaid in full, then it is in borrowers’ interest to close get this charges released – which is called “Satisfaction of Charges” by filing the respective documents with the RoC.

‍

Unfortunately, many of the borrowers are not aware or updated with the charge status of their own firm. However, with BankKeeping – these shall be updated on real time basis and one shall have full clarity on it at all points of time. Even, the Bankers need to know the updated status of this very critical information.