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Case Studies
TRANSACTIONAL – LENDING
Un-reconciled Accounts
A commercial equipment financing company was seeing an average of 173 un-reconciled items over 30 days old in the ?Due to Borrower? (DTB) account, with an average of 82 new un-reconciled items added monthly. It was determined that the DTB, a clearing-house for different accounting systems, needed significant enhancements to the accounting system to enable disparate client accounting systems to "talk" to each other and to the GL. The project applied training and performance-tracking systems for general accounting, process maps, FMEA, hypothesis testing and process control systems. In addition to significant customer satisfaction, the business saw an annual savings of $80,000 due to Six Sigma implementation.
Delinquent Taxes and Credit Risk
A small business loan department had, over the past nine months, assumed more than $750,000 in delinquent taxes associated with loans collateralized by real estate. Tax delinquencies are indicators of business failure and are not recoverable if the loan is foreclosed. Process analysis revealed several communication and ownership failures in the tax monitoring process. Proactive management systems and IT solutions were implemented to improve communication and monitoring capability throughout the process. Six Sigma techniques included process maps, FMEA, hypothesis testing and process control systems. The business unit was able to write off $300,000 in tax delinquencies. There was also a considerable reduction in operating and credit risk.
Closing Documentation Cycle Time
Borrowers required a loan processing company to meet financing contingency and closing dates in a timely manner. Preparation and delivery of the Closing Condition Letter (CCL) and Conditional Approval Letter (CAL), provided by Sales, Underwriting and Closing functions, was taking an average of nine days, while customer research and benchmarking indicated that six days should be the maximum. The company gained a "process understanding" that identified opportunities to remove bottlenecks and improve communication between the Underwriting, Sales, and Closing functions. Using process maps and measurement systems analysis, management was able to track accountability and ownership. CCL and CAL were also redesigned. Average cycle time was reduced to less than four days, and there was significant positive impact on customer satisfaction. The Six Sigma process also provided $100,000 reduction in costs.
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