Assessing and Working with Client Forecasts

One of the most overlooked pieces of information we receive is likely the borrower's forecast or budget. Often it is an item we check off the list without digging into it. It is also a report that in many cases we hide in the file and never review after the close. This is one of the biggest mistakes that a portfolio manager or lender can make.

Discover why the forecast is critical to managing the credit risk of the financing that is being provided. As you dig into the report you are given, you must have set expectations of what you are going to see. By understanding the information in the forecast, we can determine exactly how the borrower sees the future.

From there, discuss the banker's responsibility to test the numbers to determine their validity through completing the sensitivity analysis.  And explore how the forecast can influence the proposed structure of the financing. Lastly, you’ll understand the importance of keeping the forecast handy, measuring it against the actual performance of the company.

Learning Objectives:

• Discover the importance of the borrower’s forecasts and how it influences the proposed structure of financing.
• Learn to set expectations when reviewing forecasts.
• Validate numbers by completing the sensitivity analysis.

Duration: 60-minutes