How to lower customer acquisition costs in SMB lending with cash flow analysis

Cash flow analysis gives small business lenders a broader, more accurate view of borrower creditworthiness than traditional credit bureau data alone. With a complete picture of applicants, they can sharpen risk models and expand the borrower pool to applicants who may otherwise be disqualified due to a lack of context in traditional underwriting methods.

While cash flow data was difficult and costly to gather in the past, AI-powered document automation has simplified the process and introduced new efficiencies. With a lower-cost, automated solution for cash flow analysis, lenders now have an opportunity to incorporate this valuable data earlier in the underwriting process. By filtering out unqualified borrowers earlier and more efficiently, lenders can simplify the top of their underwriting funnel and minimize customer acquisition costs.

How cash flow analysis streamlines customer acquisition costs

Understanding the complex small business landscape is vital for addressing their unique needs. Lenders typically evaluate cash flow data toward the end of underwriting after credit bureau checks. However, these checks don’t always tell the whole story and can be a costly first step.

Lenders can drastically reduce customer acquisition costs by focusing on cash flow analytics during evaluation. This strategic adjustment enables early screening of unqualified candidates, reducing reliance on expensive and time-consuming credit bureau checks.

This process change is enabled by intelligent document automation. With automated methods for capturing and analyzing cash flow data, lenders can save time and money in the early underwriting stages. With a real-time look into financial health, lenders can quickly distinguish between qualified and unqualified borrowers, streamlining top-of-funnel operations and eliminating the cost of credit bureau checks for disqualified applicants.

With automated cash flow analysis scoring capabilities, lenders can efficiently test new partner channels and increase marketing spend with consistently low application processing costs.

Broadening the impact of cash flow analysis in lending

The benefits of cash flow analysis extend beyond the straightforward reduction of acquisition costs. This refined approach gives lenders a more responsive risk model, significantly diminishing the risk of default. By evaluating comprehensive cash flow data early, lenders can anticipate and mitigate risk based on past financial performance, current health and future projections.

These valuable insights into a business’s revenue, expenses, cash cushion and other loan obligations give lenders a detailed perspective on their ability to manage loan repayments. With the added efficiency of automation, they can quickly process the broadest possible range of borrower-submitted bank data, ensuring decisions are grounded in comprehensive analysis.

Moving cash flow analysis to the forefront of underwriting transforms the customer journey. This shift accelerates the decision-making timeline, leading to quicker loan approvals and improved approval rates, directly boosting customer satisfaction. Applicants benefit from responsive service and a higher likelihood of positive long-term loan outcomes.

These benefits add up to improved operational efficiency and the ability to adapt to an evolving financial landscape, giving lenders a competitive edge in a challenging market.

Automating customer qualification and decision-making with Ocrolus

In one case, Lendr, which provides small businesses with the quick working capital they need, recognized the need for improved bank statement verification and analysis efficiency. Before partnering with Ocrolus, the Lendr team dedicated over five hours each week to manually verifying bank statements, impeding their ability to swiftly and accurately gather structured financial data on prospective borrowers.

With automated processing and cash flow analysis, Lendr estimates annual savings of over 70,000 hours and $560,000 due to improved operational efficiency. The full adoption of the Ocrolus API dramatically shortened Lendr’s processing times and boosted overall effectiveness, allowing their team to focus on more strategic analysis instead of manual data entry. The efficiencies gained with Ocrolus also benefit Lendr customers through an expedited funding process that offers faster access to working capital.

With an efficient cash-flow-first approach to small business lending, Ocrolus’ AI-driven document automation can help lenders reduce customer acquisition costs, more effectively manage risk and transform the lending experience.

Book a demo today to learn how Ocrolus can help your organization integrate cash flow analysis at the top of the funnel for more efficient, confident decision-making.

Key takeaways

• Utilizing cash flow data at the beginning of the lending process streamlines operations, reducing the time and cost of manual reviews and credit checks.
• AI-powered document automation offers a lower-cost solution for cash flow analysis, giving lenders the opportunity to incorporate valuable insights earlier in the underwriting process.
• By filtering out unqualified borrowers earlier and more efficiently, lenders can simplify the top of their underwriting funnel and minimize customer acquisition costs.