Start with the events, then review the balances
A portfolio balance is the result of activity. Before producing a month-end view, understand the events recorded during the period: new loans, draws, borrower receipts, fees, reserve applications, adjustments, and payoffs.
Use a consistent cutoff and make it clear to everyone involved. A payment received after the reporting period may be known today but belong to a different period. Avoid quietly changing the meaning of a report each time it is opened.
Reconcile the cash you received
Match receipts to the bank or payment records and the correct loan. Distinguish cash received from cash applied: a receipt can be real while part of its allocation remains unresolved.
Reserve-funded obligations and borrower cash should remain distinguishable. Treating an internal reserve application as a new external receipt can distort both the loan story and the cash reconciliation.
- Identify the source, date, amount, and reference of each receipt.
- Resolve unmatched payments and duplicate entries.
- Review held or unapplied amounts.
- Check that reversals remain traceable to the original record.
Review the terms behind the interest
Interest depends on the executed terms and the applicable time period. Review the day-count convention, balance basis, rate, start and end dates, and any term changes. Do not assume two loans with the same annual rate will produce the same monthly amount.
When a loan changes during the period, check the effective date and how the change is reflected in the calculation. A later modification should not silently rewrite the historical explanation of an earlier statement.
Bring exceptions into one place
A clear exception list is often more useful than another summary total. Include pending draw decisions, late or partial receipts, maturing loans, fee disputes, missing documents, and unresolved adjustments.
Give each item an owner and a concrete next step. “Follow up” is less useful than “confirm the source of the September 3 receipt and allocate the remaining amount.”
Review statements before distributing them
Check the opening position, current activity, interest and fees, payments and credits, and resulting balance. Confirm that the statement period and recipient are correct.
The record that a statement was prepared is different from evidence that it was sent or delivered. Keep those stages distinguishable in the workflow.
Close with a repeatable evidence set
Retain the version of the reports and supporting reconciliations used for the close. Document open exceptions and any adjustments made afterward. Work with your accountant on the policies and accounting treatment appropriate to your business.
AIRE is designed to keep the lending activity and financial record connected so your month-end review can follow the events behind the figures.