In the world of finance, managing large volumes of data can be a challenge. Precision and speed are essential to ensure smooth operations. However, when it comes to processing that data, especially in the context of structured debt, companies often face a considerable operational burden. Fortunately, technology has made great strides, and one of the most innovative tools on our platform is the Collateral Processor, with its ability to handle and organize data more efficiently.
What is Vaas Collateral Processor?
Imagine that your company's origination data is as vast as one of the largest libraries in the world, like the Library of Congress in Washington, D.C., USA. It holds around 195 million items, including over 70 million books and other printed materials such as maps, movies, and manuscripts. Every time you need to find a book, you would have to browse through shelves and shelves, searching among thousands of titles, which could take you countless hours. Now, imagine someone has created an automated system that classifies, organizes, and delivers the right book to you in seconds. That's exactly what our Collateral Processor does with your portfolio data.
With this tool, we are able to organize and process large volumes of information related to loans, invoices, and other financial assets. By using advanced algorithms, this tool not only handles the heavy lifting of reconciling data, validating information, and operational decisions but also optimizes the use of your collateral. The best part is that now, thanks to the latest enhancements, this system is more flexible and powerful than ever.
The Innovation of Virtual Columns
One of the most notable updates is the introduction of virtual columns. To better understand this, let's go back to the library analogy. Imagine that some books are organized by author and others by title, which can be confusing. With virtual columns, it's as if you could now create a new shelf that groups books by topic or genre without having to physically reorganize the entire library. This virtual "column" pulls information from various others and presents it in a way that is more useful for the task at hand.
In financial terms, this means that system users can combine different data to create new reports or analyses without needing to modify the original data. This flexibility greatly reduces the operational burden, as manual processing was previously required to generate these types of combinations.
Let's imagine, for example, a case in the context of international trade: A company financing importing and exporting businesses must manage a portfolio containing a series of HS codes (Harmonized System codes) to identify the goods traded by each of its clients using a globally standardized nomenclature. These codes typically consist of 6 digits, where every 2 digits provide more detailed specifications of each product. For instance, apples are identified with the code 080810: the first two digits (08) group them under the chapter "Edible fruits and nuts," the next two digits (08) place them under the heading "Apples and pears," and the last two digits categorize them under the subheading "Apples."
A challenge for the company would be identifying the concentration of industries for which they are financing their clients' imports and exports. As part of good portfolio management, they should aim not to excessively finance a single industry or very similar industries, a use case where virtual columns add great value. By having all HS codes associated with their portfolio, it is enough to extract the first 2 digits of each one, and in a matter of seconds, without altering the original data, they will know the percentage of their portfolio allocated to each industry, enabling them to make quick and accurate decisions about it.
Validations and Error Reduction
Another significant advancement is the collateral processor's ability to perform automatic validations. Think of it as having an automatic checker that reviews each book before it is placed on the shelf to ensure that its pages are complete. If it finds a missing page error, it marks it and prevents the library from having books with missing pages.
In practice, these validations ensure that the processed data is accurate and reliable, helping to avoid costly errors. For example, when processing collateral, the tool can automatically verify that all the data meets the expected requirements before becoming part of an operation, such as a liquidity event, money recycling, or a capital call.
Time Savings and Operational Improvement
The impact of these improvements on daily operations is enormous. Previously, capital markets teams had to invest a significant amount of time and effort in debugging large volumes of data, not to mention cases where Excel would crash due to the size of the portfolio/collateral. With the new features, such as virtual columns and automatic validations, this process has become much more streamlined and less prone to human error.
This not only saves time but also allows companies to optimize their resources by focusing their teams on higher-value tasks, such as strategy and decision-making, rather than spending time on highly manual and repetitive tasks.
The collateral processor is a revolutionary tool for the world of structured debt, especially for facilities that undergo constant modifications over time.
The great versatility of its "legos" allows us to quickly modify the definitions of eligibility criteria, concentration limits, and other conditions for calculating the borrowing base, reducing friction and minimizing the cash drag for our clients.
It is very common for renegotiations and changes to occur throughout the life of a facility, and the collateral processor has enabled our platform to apply these changes in record time. Additionally, this flexibility has allowed our clients to test the effect of these changes on their borrowing base in advance.
It is our duty to create not only a more efficient future in capital markets but also one that is completely different from what has been considered the solution for decades.
As tools like our collateral processor evolve, we are reinventing the way capital markets teams approach their daily operations. The accuracy of the data and the level of transparency we allow our clients to experience through our platform help companies turn their vast data library into not only a place of enjoyment due to its accessibility but also one that surprises those looking to finance their businesses.
