Covenants Monitoring Software Use Cases for Treasury Team
Treasury teams in publicly traded insurance companies track compliance with debt covenants and credit facilities to avoid defaults. Monitoring ensures strong credit ratings and regulatory adherence. This safeguards financial stability and smooth operations.
Financial Covenants:
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Debt-to-Equity Ratio: Monitoring the ratio of total debt to shareholders' equity to ensure it stays within agreed limits.
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Interest Coverage Ratio: Tracking the ratio of earnings before interest and taxes (EBIT) to interest expenses, ensuring the company can cover its interest payments.
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Leverage Ratio: Ensuring the company's total debt relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA) stays within a certain range.
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Minimum Net Worth: Ensuring the company's net worth does not fall below a certain threshold.
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Liquidity Ratio: Monitoring current or quick ratios to ensure the company maintains sufficient liquid assets to meet short-term obligations.
Performance Covenants:
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Operating Metrics: Tracking key operating metrics such as combined ratio, loss ratio, or expense ratio to ensure the company meets performance benchmarks.
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Reserve Requirements: Ensuring adequate reserves are maintained for policyholder obligations, as required by regulators and financial agreements.
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Asset Quality: Monitoring the quality of the company’s investment portfolio, ensuring it meets stipulated credit quality requirements.
Reporting Covenants:
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Financial Reporting: Regular submission of financial statements, including balance sheets, income statements, and cash flow statements, to lenders or regulatory bodies.
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Compliance Certificates: Issuing compliance certificates that confirm adherence to financial covenants, usually on a quarterly or annual basis.
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Regulatory Filings: Ensuring timely submission of required reports to regulatory authorities, such as the SEC, to demonstrate compliance with relevant laws and regulations.
Affirmative Covenants:
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Maintenance of Insurance: Ensuring that adequate insurance coverage is maintained on the company's assets.
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Payment of Taxes: Verifying that all taxes are paid on time and that no tax liens exist against the company.
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Legal Compliance: Ensuring the company complies with all applicable laws and regulations, including environmental, labor, and financial regulations.
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Use of Proceeds: Tracking the use of funds from debt issuances to ensure they are used for agreed purposes.
Negative Covenants:
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Restrictions on Indebtedness: Monitoring new debt issuance to ensure it does not exceed agreed limits.
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Restrictions on Dividends: Ensuring dividends paid to shareholders do not violate covenant restrictions, particularly those related to maintaining sufficient capital.
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Restrictions on Asset Sales: Ensuring significant asset sales or disposals are within agreed limits or receive required approvals.
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Restrictions on Investments: Monitoring investments to ensure they do not breach agreed limits on risk, geography, or asset class.
Event of Default Clauses:
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Cross-Default Clauses: Ensuring that defaults on any financial obligations do not trigger cross-default clauses that could affect other debt agreements.
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Material Adverse Change (MAC) Clauses: Monitoring for any events that could be considered a material adverse change, which could trigger a covenant breach.
Documentation and Audit Trail:
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Document Management: Keeping detailed records of all financial agreements, compliance certificates, and correspondence related to covenant compliance.
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Audit Trail: Maintaining a thorough audit trail of all actions taken to demonstrate compliance, including internal approvals, document submissions, and communications with lenders or regulators.
Regulatory Compliance:
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Solvency Requirements: Ensuring compliance with solvency regulations imposed by insurance regulators.
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Capital Adequacy: Monitoring and reporting on the company's capital adequacy ratios as required by regulatory bodies.
Covenant Waivers and Amendments:
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Waiver Tracking: Tracking any waivers obtained for covenant breaches and ensuring all conditions for waivers are met.
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Amendment Monitoring: Ensuring any amendments to covenants are documented and complied with.
Communication and Collaboration:
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Stakeholder Notifications: Ensuring timely communication with internal stakeholders, including the board, senior management, and legal teams, regarding covenant compliance status.
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External Communication: Managing communications with lenders, rating agencies, and investors regarding compliance status and any potential covenant breaches.
By effectively tracking these covenants, treasury teams can manage risk, maintain financial stability, and support the company's overall strategic objectives.
Covenant Tracking & Monitoring are important part of managing borrowers financial and reporting documents for loan monitoring. Almost 70% of banks still rely on some combination of spreadsheets, core ticklers, or other manual processes.
BankStride is a digital banking platform you've been waiting for. BankStride makes it easy for banks to automate loan documents, exceptions tracking, loan reporting and covenant monitoring. No more managing checklists, searching for files in emails, or waiting on updates from other parties. Just create your requests and let BankStride do the work for you.
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Many Banks and lending companies depend on non-public client information to provide their
services. Examples include:
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Automate Document Gathering
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Checklist For Loan Reporting Requirements
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Frictionless Customer Experience To Send Documents
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Create Credit Exceptions & Tickler Tracking
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Automated Loan Monitoring and Loan Compliance
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Loan Reporting, Risk & Financial Reporting
Without a dedicated tool, professionals would have to manually manage checklists and calendar
events to keep track of all required information. BankStride automates this work while improving
security and reporting.
BankStride is powerful for bankers
Flexible information management
BankStride supports one-off and recurring information requests with flexible storage layer configuration options.​
Healthcare & Life Sciences
Bank leadership can drill down to identify pockets of risk and underperformance, ensuring every team member knows where to focus.​
Loan Monitoring
Track financial reporting, covenants, and certificates, and issue compliance certificates for signature via DocuSign.​
A Clear Banker's View
See your portal in action.
Easy for bank customers
No usernames and no passwords
Customers receive tokenized links for portal access, and bankers can request information from anyone with an email address.
Upload or email
Easy-to-use customer portals show exactly what is needed, while email-based file ingestion lets customers respond by emailing files.
Timely alerts
Reminders and alerts are aggregated to prevent information overload, can be toggled per user, and feature customizable schedules.
A Clear Customer's View
See your portal in action.
Why BankStride platform
BankStride is a web-based software solution for commercial banks and credit unions that works with customers to manage loan agreements and eliminate credit exceptions. FileStride improves credit exception management by reaching beyond the walls of the bank to work directly with customers.
Customers respond to information requests much like paying an online invoice – they clearly see what’s required of them and they act. Customers can respond using a login-less portal or by email – no account or password required.
With BankStride, banking teams can schedule recurring requests for documents like financial statements and tax returns, compare actual and threshold covenant values (e.g. minimum DSCR), and send compliance certificates for signature via DocuSign.
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BankStride is like autopay for customer information.
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How does our bank customer use BankStride
For example, BankStride has proven effective in managing revolving lines of credit. BankStride automatically requests and reminds customers to submit monthly AR and AP listings, inventory analyses, and borrowing base certificates each month.
BankStride reminds the banking team to test various financial ratios. The results of the customer’s actions and the ratio testing all roll up to per-banker and per-office reports that can be run on-demand in seconds.
Our bank customer uses BankStride to schedule and automate the activities required to monitor loan agreements.
How does this help banks
Banks that pursue superb loan agreement management are faced with handling complex recurring tasks using the basic tools of email, spreadsheets, and calendar ticklers. Banks that let this work fall behind risk delaying their awareness of problematic loans or operating practices, jeopardizing capital and reputation.​
A borrower’s risk profile can change significantly over the years that follow a lending event. Managing loan agreement adherence through reporting and internal monitoring is an ongoing and tedious battle for banks.
With BankStride, banks gain high-resolution loan agreement monitoring that saves time and delights customers.
Bankers increase efficiency and improve loan risk and compliance with loan monitoring, reporting and exceptions.
FEATURES
Know what you have, know what you need.
BANKERS STREAMLINE LOAN REPORTING DOCUMENTS
Why BankStride?
We're the digital banking solution you've been waiting for.
We make it easy to automate your loan reporting and covenant monitoring. No more managing checklists, searching for files in emails, or waiting on updates from other parties. Just create your requests and let BankStride do the work for you.
How it works
BankStride combines checklists with cloud storage to help you communicate and monitor your information requests and documents.​
All it takes to get started:
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​Request items by creating projects for one-off items or templated lists.
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Review incoming files from your client and mark items as satisfied or complete.
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Repeat with automatically recurring requests and reminders.​
We've facilitated over 1,000,000 client interactions...and counting.
