The quarterly compliance certificate
Each quarter the finance director owes the bank a compliance certificate with income figures, projected rent over the next twelve months, and details of any lease events, vacancies or arrears. The facility agreement defines what counts. Someone builds a spreadsheet from the rent roll, adjusts for breaks and expiries, checks arrears, and then the finance director rechecks everything because the bank's definitions are particular.
When the portfolio has loans with two lenders, each with different definitions and templates, the job doubles.
Why lender reporting is always manual
The inputs are the same data the business already holds, but assembled to someone else's definitions on a fixed date.
- Projected rent must reflect breaks, expiries and incentives as the facility defines.
- Definitions differ between lenders and sometimes between loans with the same lender.
- The rent roll is not reliably current on the test date.
- Arrears and vacancies are taken from separate reports.
- Nobody keeps a record of how last quarter's figures were built.
How a facility agreement is read is for your finance team and advisers. Once that reading is agreed, applying it each quarter can be automated.
Test dates rarely line up neatly with quarter days. A break exercised on the day after the test date, or a rent review agreed but not yet billed, may or may not count, depending on the facility wording. Working that out once, writing it down and applying it each quarter is safer than rediscovering it every time.
What the scramble costs
Senior finance time goes into assembly rather than conversation with the lender. Errors in a certificate are a serious matter. Late reporting strains the relationship. And when the lender asks how a figure was calculated, the answer depends on whoever built the spreadsheet.
The spreadsheet itself becomes a risk. Built by one analyst, adjusted each quarter, with hard-coded exclusions nobody remembers adding, it is exactly the kind of file that produces a wrong certificate the quarter after that analyst leaves. The bank will not accept that as an explanation.
The lender reporting we build
- The definitions your finance team agrees for each facility are written into calculation rules: what income counts, how breaks and expiries are treated, which tenants are excluded.
- On each test date, inputs are drawn from your lease data, billing and accounts systems as at that date, and a snapshot is stored.
- Calculations run per facility, with every step shown and linked to the lease lines behind it.
- Sense checks compare the result with last quarter and flag large movements with the lease events that explain them.
- The pack is produced in each lender's template, for the finance director to review and sign.
- Headroom against each covenant is shown for the months ahead, based on known lease events, so the finance team sees pressure coming.
| Input | Comes from | Checked by |
|---|---|---|
| Contracted and projected rent | Lease data and incentive schedules | Rules per facility |
| Breaks and expiries | Lease event tracker | Rules per facility |
| Arrears | Ledger | Comparison with last quarter |
| Vacancies | Unit records | Comparison with rent roll |
| Interest and costs | Accounts system | Finance review |
Quarter end, after
The draft pack is ready on the test date, with working the finance director can follow. Two lenders with different definitions are just two sets of rules. Questions from the lender are answered from the stored snapshot. And the forward view means covenant pressure is discussed before it becomes a breach.
It also helps with refinancing. A new lender's due diligence questions about how income is calculated can be answered with the same rules and snapshots, instead of reconstructing years of certificates.
Is your lender reporting like this?
- Each quarter's certificate is built from scratch.
- Different lenders use different definitions.
- The rent roll is not current on test dates.
- You cannot easily show how a figure was calculated.
- Covenant headroom is not tracked between test dates.