Significance of consistent and uniform financial spreading

Acuity Knowledge Partners
2 min readAug 21, 2022


Published on August 8, 2022 by Neha Poddar

Financial spreading refers to the process of analysing financial statements and presenting the information at a granular level for enhanced underwriting and risk assessment. For a typical bank, the process comprises collecting a client’s financial statements, translating the financials into a standardised template, computing financial ratios and using these ratios to generate a risk rating. This helps the bank make strategic business decisions and manage risk effectively.

However, the financial spreading and documentation processes have faced a number of challenges due to the multiple data sources and templates being used:

  • Current assets such as pre-paids and amounts due from related parties are moved to non-current assets
  • Non-current liabilities such as loans from related parties are spread as current liabilities
  • Non-current assets may include current assets that are restricted

These challenges impact a bank’s ability to accurately predict losses and proactively manage credit risks. Spreading warrants the same thoughtful input as underwriting and should not be treated as a mechanical process. Figures from the company-prepared statements or tax returns cannot always be transferred directly to the same line on the spreadsheet. The analyst or underwriter would need to think carefully about how ratios would be impacted when an item is spread differently from the accounting principles. They would also need to validate historical spreads data to make it consistent across the database.

Consistent and uniform financial spreading would lead to the below:

  • Faster turnaround time — reduces time taken for loan-related decisions
  • Operational consistency — removes subjectivity that could lead to different treatment of clients with similar profiles
  • Highly customisable — flexible for use according to different client requirements in terms of analysis
  • Increased productivity in credit underwriting — reduces operational burden on the credit analysi s team

How Acuity Knowledge Partners can help

Banks need to reduce time spent on the process by digitally transforming the spreading platform. Our automated BEAT Aura extraction and spreading tool maximises benefits by redefining the commercial lending process. It helps research analysts automatically retrieve information from company filings and populate relevant data points in client-approved MS Excel models and templates. The process delivers significant gains in productivity and cost reduction, and guarantees a very high level of accuracy.

With two decades of experience in delivering research and analytics services to 420+ global financial institutions, we have built a strong franchise in the financial spreading process. We understand the nuances of different asset classes (C&I, Commercial Real Estate, Leveraged Lending, Asset Based Lending, Dealer Commercials), and are experienced in working with a range of spreading platforms.

About the Author

Neha Poddar has over 14 years of experience in working with leading global organizations in the banking and commercial lending domains. At Acuity Knowledge Partners, she has managed a large portfolio underwriting team for a mid-size US bank covering diverse industries. Her expertise spans a broad range of credit analysis, financial modelling, portfolio management and onshore client-facing roles. Neha holds a Ms. Finance degree from ICFAI university and a bachelor’s degree on Commerce.

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