4 traits every credit memo should have

first_imgWhy is writing effective credit memos so vexing? Given that a credit memorandum is one of the most critical documents in the life of the loan, it would seem like a straightforward process.However, lenders, credit analysts, and other staff frequently seek tips for writing better credit memos.Writing an effective credit memo is so important to the lending process. The loan committee uses the credit memo in deciding whether to approve the loan, so the lender wants to put forth an accurate and complete picture of the member — not only for the member’s sake, but also for the credit union’s risk management. At the same time, this document can become extremely complex and large because it has a lot of data coming from various sources.Lenders and credit analysts take member information, financial ratios, any global cash flow analysis, the assigned risk rating, proposed loan pricing, and terms of the proposed loan, and must organize all of this into a cohesive credit memo.This information will then be used for the initial loan decision as well as for modifications, renewals, or annual loan reviews later on.In addition, all of this data collected during the loan application and credit analysis should be put together in a way so that credit reviewers or supervisory agencies are able to reach the same decision the credit union did and access the supporting documentation. Not surprisingly, many bankers find the task to be a difficult one.Templates are critical for efficiency and effectiveness in writing credit memos, according to Alison Trapp, Abrigo’s Director of Client Education. “Everyone knows where to look for a certain piece of information,” she says. An automated credit analysis solution that can create customizable credit memos can also help credit unions incorporate four effective credit memo traits:ClearConciseOrganized RelevantEffective credit memos are clearUsing specifics and staying away from adjectives in the writing can help credit memos be more effective.Trapp notes that one person’s definition of a tall man might be 5 feet 11 inches, while another’s might be 6 feet 9 inches. “When you’re writing a credit memo, think about the phrase, ‘significant decline in revenue.’ Stay away from that adjective and instead, give more facts,” she says.Avoiding jargon is another way to make credit memos clearer and thus, more effective. It might be tempting in some industries, such as healthcare or technology, to use a lot of jargon, but that might make it difficult for those outside the industry to follow along, and it might be cluttering up the content.Effective credit memos are conciseTrapp says focusing on your audience or audiences and their needs will help shape the content of the memo.Remember that only the salient points need to be included. One common problem with credit memos is that the writers don’t edit out unnecessary information.“You can’t put everything in there and expect your approver to pull out the relevant points just because you want to cover your bases,” she says. “It’s part of your job to make sure your approvers know what the key elements are to the credit memo.”Being concise also means choosing words carefully and using the fewest words without sacrificing clarity, she says. Reviewing the memo for opportunities to use simpler words is another idea. “Maybe in college or high school you were incentivized to use more words to get to the word count,” Trapp says. “That’s not the point of a credit memo.”Effective credit memos are relevantWhat are the relevant points to include in a credit memo? Trapp recommends looking for the drivers or impacts of various data points, because they usually tell a story. One way to identify the drivers, she says, is to repeatedly ask and answer the question “why?” In other words, if sales for the member went up, describe why. If it was because customers bought more, describe why. If that was because a new version of the product was delivered, describe why. After doing that, the credit memo might, therefore, describe the driver of a sales increase by saying, “Sales went up because customers wanted the additional features in the new version.”Asking “so what?” helps identify impacts. For example, by asking and answering that question about cash flow, the memo writer might be able to explain that the applicant’s cash flow decreased in the period despite a sales increase due to a new, bigger customer with longer payment terms than the typical customer.Effective credit memos are organizedMost listeners and readers tend to remember most accurately the first and last things they hear or read. Organizing credit memos with that in mind can help create more effective credit memos.Trapp says a potential executive summary at the beginning of a memo could include the recommendation, why the credit union would want to make the loan, what could go wrong and the transaction structure. At the end of the memo, the risk rating analysis could include an affirmation of the rating, the positives and negatives, and the triggers to change the rating, assuming a pass rating for a new deal.Surprisingly, many credit unions are still creating credit memos by copying and pasting information from previous documents and from their various data sources. Some might use and re-use templates this way, but that still requires proofreading to make sure a previous client’s data wasn’t inadvertently left in a field.Often, credit unions will use an old version of a credit memo and just add a new section to it, without cutting anything, and this can contribute to excessively long memos.Using an automated credit memo solution that allows the credit union to customize the memo template helps standardize credit memos, which can be helpful in some cases. Loan committee members who always know where to look in a memo for certain information may be able to review memos more efficiently.An automated solution for credit memos can also make it easy to review the format periodically to make sure the template is streamlined and meets the needs of the various audiences. Doing this annually is a good idea, Trapp says.“Understand why you organize the credit memo the way you do,” she says. “Sometimes it just doesn’t make sense according to the four best practices.” 1SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Mary Ellen Biery Mary Ellen Biery is a Senior Writer and Content Specialist at Abrigo. Mary Ellen is a veteran financial reporter whose work has appeared in The Wall Street Journal, Dow Jones … Detailslast_img read more

WBB : Seal the deal: With win over bottom-feeder Seton Hall, SU could ensure NCAA Tournament berth

first_img Comments Ten days of waiting.That’s what the Syracuse women’s basketball team would be saddled with if it loses to Seton Hall on Friday. Ten days full of anxiety, question marks and overall powerlessness as the days inch closer to Selection Monday and the Orange’s NCAA tournament fate.But Kayla Alexander said she won’t let that idea cross her mind.‘Devastating,’ she said of that potential waiting period. ‘That’d be the worst feeling ever. I’m not even going to think about that.’SU (21-8, 9-7 Big East) will hope to avoid that outcome Friday at 2 p.m. when it takes on the 16th-seeded Pirates (8-21, 1-15) in the first round of the Big East tournament in Hartford, Conn. It represents a crucial game for the No. 9-seeded Orange, as a bad defeat could ultimately relegate Syracuse to the Women’s National Invitational Tournament for the third straight season.AdvertisementThis is placeholder textA win gives SU a chance to knock off eighth-seeded Georgetown (21-9, 9-7) on Saturday at noon and potentially set up a rematch with top-seeded Connecticut at 2 p.m. Sunday.Much of SU’s success this weekend falls heavily on the sophomore Alexander’s shoulders. On Thursday, she was named to the All-Big East first team. And since a home loss to DePaul on Feb. 8, in which the center scored just four points, head coach Quentin Hillsman has made post play the focal point of the Orange offense. And Hillsman said Alexander and junior forward Iasia Hemingway will continue to carry Syracuse in the conference tournament.‘Absolutely it’s going to be the same thing straight through this thing,’ Hillsman said. ‘They’re our two highest percentage shooting starters, so we’re going to continue to put the ball in their hands and let them make plays.’Alexander had a streaky regular season, dominating opponents one game and becoming a forgotten factor in the next. She leads Syracuse in scoring with 14.4 points per contest but failed to hit a field goal in just nine minutes of action when the Orange beat Seton Hall 75-50 on Jan. 8.But in SU’s recent five-game winning streak, which ended Monday in a loss to UConn, Alexander and her frontcourt partner Hemingway powered the team’s offense. Alexander tallied 19.2 points per game in that pivotal stretch, while the junior forward Hemingway averaged 12.2 points.‘They’re rolling,’ senior guard Erica Morrow said. ‘They’re carrying the team. They’re opening up a lot of things for us on the perimeter. … Definitely we’re emphasizing getting the ball in the paint and just letting Kayla just go to work and do the things she needs to do to score the basketball.’The duo started rolling when SU desperately needed wins to improve its NCAA tournament resume. After the loss to DePaul, the Orange had just 16 wins and was 4-6 in the Big East.But Syracuse turned to its frontcourt for wins over conference bottom-feeders Villanova, Providence and Cincinnati and added back-to-back wins over Louisville and St. John’s, now the No. 6 and No. 7 seeds this weekend, respectively.The strategy for the Orange has been relatively simple. Hemingway gets the ball near the free-throw line, where she has the option to drive, kick the ball back out to a guard or dump it down to Alexander in the post. If she chooses the latter, Alexander has one job: get the ball up to the rim.The sophomore center has just one assist through 29 games this year, so she has adhered to her coach’s instructions. Hillsman said it would be a big concern for an opposing coach knowing Alexander will shoot every time she gets the ball inside.‘If I’m coaching against a post player,’ he said, ‘and she’s a 6-foot-4 kid, she shoots in the high 50 percents, you know she’s going to shoot it every time and then you know the team’s going to go rebound it, I think it’s a scary thing. We tell her to get it up on the rim because we feel good about it.’Syracuse is 4-5 when Alexander fails to reach double-digit points. The sophomore still feels her team has something to prove in the Big East tournament. A loss to Seton Hall would be devastating. But a win or two could seal SU’s berth in the field of 64.‘We’ve just got to go out there, play hard, prove that we believe we’re good enough and strong enough to play in the NCAA tournament,’ Alexander said. ‘And to go out there and get some wins and prove to ourselves that we’re able to play at the next level.’[email protected] Facebook Twitter Google+center_img Published on March 3, 2011 at 12:00 pmlast_img read more