In asset-based lending, investors rely heavily on the numbers originators report. But why?
This breakdown explores the practical infrastructure, policies, and data strategies that support investor confidence and how Cascade enhances transparency and validation.
1. Excel is Still the Default
Most investors monitor portfolio performance through Excel-based reports. This means originators can deliver key metrics, like DPD and outstanding balance, without needing to expose every underlying input or calculation.
2. File Size and Complexity
Trying to recalculate DPD or outstanding balance at a granular level can make Excel files too large to use. Simplified summaries are not just preferred, they're required.
3. Trust in Loan Management Systems
Many originators use third-party or industry-standard Loan Management Systems (LMS) to run calculations. These systems are typically reviewed during deal diligence, giving investors confidence in the data’s consistency and structure.
4. Investors Can’t Always Rebuild the Math
Reconstructing loan performance data in-house requires infrastructure most capital providers don’t have. Instead, they rely on originators and tools like Cascade to validate figures based on raw inputs.
Calculation logic isn't always standardized.
This variability makes it essential for investors to understand originator policy, product structure, and data logic.
Cascade works behind the scenes to validate loan performance based on raw source data. By rebuilding repayment schedules using the original loan terms (even in cases of restructured or cash-modified loans) Cascade provides a level of validation investors rarely have time or tooling to perform themselves.
When investors must make decisions based on minimal datasets, Cascade brings clarity through structure and automation.
Two metrics matter above all: Days Past Due (DPD) and Outstanding Balance. These are not only the most important, they’re also the most auditable.
1. DPD: A Real-Time Signal of Portfolio Health
DPD tells investors how late payments are and how risky the portfolio might be.
DPD is also the foundation for many early-warning systems. Learn more in our blog: How Default Rates Are Calculated
2. Outstanding Balance: The Exposure Anchor
Outstanding balance reflects the amount of capital still at risk.
It’s used for:
Key considerations:
When clients pay ahead of schedule, balances should fall in line with or outperform expectations.
Investors don’t blindly trust originators—they trust efficient infrastructure, validated systems, and policy alignment. Cascade strengthens that trust by validating data directly from the source and offering deeper insights into what’s at stake.
Looking to streamline how you validate and manage originator data?
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