Doubling Underwriting Throughput for Ritmo

Ritmo needs to reach a high conviction financing offer fast. They had identified the time taken to review bank data as one of the primary blockers to doing this. Slow review time was affecting underwriting throughput, time-to-offer, and ultimately, the number of funded deals. With Heron Data, Ritmo gained access to cash flow data & insights allowing them to halve the time spent reviewing applications and ultimately unlock growth for more clients.

The Challenge: Long application review, fewer funded deals

Ritmo provides growth capital to help eCommerce founders scale the growth of their stores through their invoice financing solution. Before Heron, Ritmo spent significant time analysing the cash position of each client, resulting in a longer lead time to decision for applicants and fewer funded deals.

Solution: Cash flow data & insights to speed up underwriting

Ritmo partnered with Heron to instantly assess the health of applicants’ cash flow from bank transaction data; using revenue & debt categorisation, a cash-based P&L and credit spreads to streamline their underwriting process. 

  1. Revenue classification:  Heron’s revenue categorisation populates key data for underwriting, such as average monthly sales, circumventing the need to source this data from Commerce accounts or by manual review
  2. Debt classification: Ritmo uses Heron’s classification of debt investment and debt repayment to understand affordability of the applicant 
  3. Cash-based P&L: Using Heron’s cash-based P&L gives a holistic view of an applicant’s cash position, allowing Ritmo to understand where the eCommerce is investing their money and operating margins at a cash level. Additionally, the recreation of cash-based P&L allows Ritmo to rapidly & accurately calculate runway of an eCommerce to make an informed credit decision
  4. Overview of spreads: Heron calculates a range of spreads used for underwriting, giving an instant view of a company’s financial health which helps Ritmo’s Credit Risk team to quickly assess an applicant’s ability to take a loan

Results: Automating Ritmo’s credit process

Heron’s platform has enabled Ritmo to halve the time spent reviewing applications in cash flow underwriting (average time per company reduced from 45 minutes to less than 20 minutes), with higher accuracy. The provision of enriched bank data has allowed Ritmo to build additional functionality to enhance their credit decisioning and has been a major catalyst in implementing end-to-end automation of the entire credit process at the company.