What Is Negative-Day Detection?
Negative-day detection refers to counting the days in a given statement period where balances fall into the negative.
In MCA and small business lending, this metric is a key risk indicator because consistent negative balances mean the business is struggling to meet obligations and may not handle additional funding.
Negative-day detection typically appears during bank statement scrubbing, when balances are parsed and structured. Operators use it to measure financial health and to apply appetite rules that exclude applicants with excessive negative days.
How Does Negative-Day Detection Work?
Negative-day detection works by scanning account balances across the statement period.
- Balance review: Daily balances are parsed from the statement.
- Negative identification: Days with balances below zero are flagged.
- Frequency calculation: The number and percentage of negative days in the period are recorded.
- Risk classification: Frequent negative days are noted as a strong red flag.
Heron automates negative-day detection inside its scrubbing engine.
- Automated parsing: Bank statements are ingested and balances extracted line by line.
- Risk surfacing: Negative balances are flagged and counted automatically.
- Structured output: Results such as “5 negative days out of 30” are written directly into the CRM.
- Action routing: Deals exceeding funder thresholds are flagged for review or routed out of appetite.
This makes sure underwriters see the risk instantly without manually scanning each statement page.
Why Is Negative-Day Detection Important?
For brokers and funders, negative-day detection is important because it highlights businesses with weak cash management. A high count of negative days usually predicts repayment problems and default risk.
Automating this detection reduces turnaround time, strengthens accuracy, and ensures every applicant is screened against this risk factor consistently. It allows teams to protect portfolios while moving faster on viable deals.
Common Use Cases
Negative-day detection is applied in daily underwriting workflows.
- Flagging applicants with repeated overdrafts and cash shortages.
- Screening out submissions that breach appetite thresholds for negative balances.
- Feeding risk signals into automated policy checks.
- Writing negative-day counts into CRM fields for underwriter visibility.
- Escalating high-risk cases for manual exception review.
FAQs About Negative-Day Detection
How does Heron automate negative-day detection?
Heron parses daily balances from bank statements and flags days with negative values. The system counts frequency and writes results into the CRM for quick underwriting review.
Why are negative days a risk signal?
Negative days show that a business lacks sufficient cash to cover expenses. Frequent negative balances increase the chance of repayment problems and default.
What outputs should teams expect from negative-day detection?
Teams receive structured CRM fields with the number and percentage of negative days in the statement period. These outputs feed directly into appetite screening and underwriting.