What Is an Exception Rate?
An exception rate refers to the share of items flagged as exceptions during intake or scrubbing. In MCA and small business lending, this typically happens when packets are incomplete, statements are stale, or parsing confidence is too low to allow straight-through processing.
This measure is essential for operations leaders. It indicates the quality of submissions, the reliability of automation, and the level of human intervention still required to clear deal flow.
How Does an Exception Rate Work?
An exception rate is calculated by comparing flagged submissions to total submissions.
- Item capture: All submissions entering the system are logged.
- Exception detection: Completeness checks, risk flags, or low-confidence parsing identify exceptions.
- Routing: Flagged submissions are sent to exception queues or returned to brokers.
- Metric calculation: Exceptions are divided by the total number of submissions, producing a percentage.
In Heron, the exception rate is tracked automatically throughout the workflow.
- Automated scrubbing: Statements, IDs, and decision emails are parsed and checked for completeness, policy alignment, and fraud.
- Confidence scoring: Fields below accuracy thresholds trigger exception flags.
- Queue routing: Exceptions are isolated into review queues without slowing the rest of the flow.
- Next action: Teams target improvements by analyzing the exception types that occur most frequently.
This makes the exception rate both a performance measure and a feedback loop for process improvements.
Why Is the Exception Rate Important?
For brokers and funders, the exception rate is important because high exception levels reduce throughput and increase costs. If too many submissions need manual review, automation cannot deliver its full value.
Heron reduces the exception rate over time by refining scrubbing logic and expanding coverage. Even when exceptions occur, Heron prevents them from blocking the pipeline by routing them separately while clean submissions continue through.
Common Use Cases
Exception rate is widely used in quality monitoring and process improvement.
- Measuring how many submissions require manual review in a given period.
- Identifying the most common exception types, such as missing documents or mismatched IDs.
- Comparing exception rates before and after deploying new automation rules.
- Using the metric to prioritize workflow tuning or broker training.
- Tracking progress in reducing manual work as automation adoption expands.
FAQs About Exception Rate
How does Heron track the exception rate?
Heron monitors every submission, flags exceptions during scrubbing or write-back, and calculates the percentage of flagged items relative to the total intake.
Why is the exception rate valuable for MCA brokers and funders?
It shows where bottlenecks remain and where automation can improve. Lower exception rates mean faster decisions, lower costs, and fewer manual touches.
What outputs should teams expect from tracking the exception rate?
Teams gain a percentage that highlights how much work flows automatically versus how much requires review. Reports also show exception trends, guiding improvements.