Note: Descriptions are shown in the official language in which they were submitted.
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Titfe: A COMPUTERIZED METHIOD AND SYSTEM FOR
MANAGING A FINANCIAL CAPACITY OF A BUSINESS
FIELD OF THE INVENTION
This invention relates gener<~Ily to the field of business
management and more particularly to information systems and computerized
methods to permit business managers and capital providers to more ably
manage and monitor, respectively, the financial affairs of a business
enterprise.
BACKGROUND OF THE INVENTION
All business entities require capital in one form or another.
Often the required capital is provided by others, either in the form of
investment capital, or in the form ofidebt financing. In either case the
capital
provider has a financial interest in monitoring the financial affairs of the
business on an ongoing basis. Business nnanagers also have a need to
know the financial status of their business to properly manage various
aspects of the business, such as growth, receivables, debt servicing,
dividend payments and the like. Boards of directors, responsible for
oversight of such businesses also have a need to monitor the financial
status of the enterprise to responsibly carry out their corporate governance
mandate.
In the past the accounts of a business were recorded
manually, and then a summary would be prepared periodically. The
summary would then be periodically reviewed, for example, monthly and
would also be used in response to a particular issue or situation, such as a
proposed expansion, capital expenditure, bard debt or the like. At any given
time there are any number of outstanding cheques which may or may not
have been cashed and if cashed, not yet clE~ared, commitments for future
purchases in terms of issued purchase orders, and the like, so the
businesses' bank position lags their true cash position.
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This time lag presents a problern for both the business and the
capital provider. For the business manager, who reviews the status of the
cash flow on the basis of recorded cheques, there may appear to be less
cash in the bank than there actually is becan,~se certain cheques have not
been cashed and remain outstanding. From the banks' point of view there
appears to be more cash than there really is because fresh cheques may
have been written and issued, but not yet pre:>ented for clearance. Thus, for
both business managers and capital providers such as a lender, there is
often a temporal disconnect between the state of the bank account
(drawings) and what the true cashlloan position of the enterprise is.
More recently electronic books of accounts have been kept,
but still these books of accounts are typically updated only periodically, for
example at month end. By the time the data entry is complete, it may well
be two to four weeks into the next monthly cycle, so the tabulations provided
are more historical in nature than current. Even today with electronic record
keeping, the availability of financial resourcE;s or the financial capacity of
a
business to validate fresh spending is very diifficult to determine because of
the time lag. This discrepancy between whait a company has agreed to pay
and what it has actually paid is referred to as a cash float. The size of the
cash float will vary depending upon what cheques have been cashed when.
This unknown float can compromise the abiliity of the managers to manage
the business. The ability of any capital proviider to protect their investment
or for a board to exercise its corporate governance function is similarly
compromised. Further, the cash float will typically grow in an unfavourable
economic situation which will exacerbate any financial management issues
at a time when the same is most critical.
Another complicating factor relates to cash flows into a
business such as receipts and collections. Such receipts are somewhat
unpredictable, since they depend upon the financial condition of the paying
enterprise. Thus the amount of money which might be collected and thus
available in the future for any proposed c~nrrent transaction presents an
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additional uncertainty into the cash position of the enterprise since it may
often be based on an unknown present cash position.
There are many forms of business information software which
are used to electronically keep track of the books or accounts of a company.
In addition to standard off the shelf software; packages, many businesses
use proprietary software uniquely developedl for their particular enterprise.
For a capital provider, such as a lender, assessing the risk of a loss of
capital is necessary to provide a meaningful basis for assessing the fees to
charge any borrower. Most lenders also have their own proprietary
software, which contains the information on many borrowers. Thus., neither
the lender nor the borrower will agree to provide direct access to their
financial software to the other.
Thus, the most common form of communication ofthe financial
affairs of a business to a lender is through the use of standard accounting
reports which include profitlloss statements, valance sheets, aged accounts
receivables reports and the like. These may be in the form of printed
documents or more likely electronic documents which are developed by
exporting the relevant financial information from one or more software
packages into an appropriate spreadsheet. Vllhen received by a lender,
typically a data entry step is required to input the borrower's information
into
the lender's software.
Most capital providers, such ass lenders will typically impose
reporting .requirements to permit the lender to monitor the affairs of the
business so the lender can in turn gauge the risk of losing the advanced
capital. In commercial lending, the value of the lent capital exceeds the
value to the lender of the lending transaction meaning that the most serious
risk to the lender or capital provider is a loss of capital, rather than a
loss of
the account. The reporting requirements on the business can be onerous
and can use up considerable precious executive and finance time because
of the need to provide a specific report format. Of course, in a business
downturn any reporting requirements imposed by a lender typically become
even more onerous and even more executive time needs to be devoted to
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this issue, just when, because of other critical issues, there are even less
resources available to do so.
Modern communications facilities, such as the Internet, provide
a potential for enhanced capability for business managers and capital
providers to access and review relevant iniformation. In the recent past
various methods for improving the communication between banks and
customers have been proposed. For example, PCTIUS98118934 teaches
a method and apparatus for making loan aplalications and placing them up
for bid by a plurality of potential lenders. PCTIUS97106358 teaches a real
time synthetic currency network for traps<~ctions between lenders and
borrowers. PCTIUS00/04269 relates to an interactive point access system
to permit access to conventional consumer banking services via the Internet
and PCTIUS99I28076 relates to an electronic factoring system. However,
there remains a gap between the capabilitiE;s of modern communications
systems and methods and apparatus which could use such capabilities to
help manage and monitor timely information relating to the financial affairs
of a business enterprise.
SUMMARY OF THE INVENTION
What is required is a method aind system which will eliminate
the problem imposed on a capital provider or business manager by having
a cash float which can only be determined in retrospect. Preferably such a
system would be easy to use and would autornatically retrieve the necessary
information from the electronic records of account of the business to permit
the information to be completely current. Fuirther the information should be
reviewed, analysed and presented in a format which facilitates the
management function of the person receiving the information, whether this
is for capital management or otherwise. Further the system and method
should permit a forward looking evaluation to be done to determine a future
cash position of the enterprise. Thus, even iif there is sufficient cash at
the
present, the method should determine if the proposed transaction will place
the business in an undesirable cash position in the future. Further the
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system should be capable of interfacing many different computing platforms
and yet will extract only the pertinent information.
Therefore, in accordance with a first aspect of the present
invention, there is provided a computerized method of managing information
relating to a financial capacity of a business having electronic records of
financial accounts, the method comprising the steps of:
providing a software system for monitoring a cash position of
the business, said software system including one or more predetermined
limits defined by a financial capacity of the business;
permitting said software systern to periodically connect to the
electronic records to receive updated transaction information to calculate a
current cash position;
calculating a cash position of the business in respect of a
proposed transaction by the business;
calculating a permitted cash position based on said updated
transaction information and one or more limits defined by said financial
capacity;
comparing the cash position of the business after said
proposed transaction to said permitted cash position; and
providing an indication ofwhetherthe proposed transaction will
cause the business to fall outside of any limits defined by said financial
capacity.
In accordance with a second aspect there is provided a
computerized system for managing information relevant to a financial
capacity of a business having electronic records of financial accounts, the
system comprising:
a software platform for monitoring a cash position of the
business, said software platform including one or more predetermined limits
defined by the financial capacity of the business;
a communication connection between said software platform
and said electronic records of account to permit updated transaction
information to be provided to said software platform;
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wherein said software platform further includes an actual cash
position calculation module, a permitted cash position calculation module
and a comparer to permit the two cash positions to be compared; and
a communication module for communicating whether the
proposed transaction will cause the business to fall outside of any of said
limits defined by said financial capacity.
BRIEF DESCRIPTION OF THE DRAWING;i
Reference will now be made to various figures which illustrate,
by way of example only, preferred embodirnents of the present invention
and in which:
Figure 1 depicts an overall system architecture for
implementing the present invention;
Figure 2 shows an algorithm according to the present invention
for cash disbursement creation procedures;
Figure 3 shows an algorithm iFor determining available cash
according to the present invention;
Figure 4 shows an algorithm for testing a cash disbursement
against other lender covenants;
Figure 5 shows an algorithm for testing a cash disbursement
against company operating criteria;
Figure 6 shows an algorithm for determining future cash
position based on a proposed transaction according to the present invention;
and
Figure 7 shows the procedures according to the present
invention for issuing a supplier purchase order.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
An architecture for implementing the present invention is
depicted generally at 10. At 12 is a schematic representation of a series of
electronic records of information on accounts. of an enterprise which may be
for example, a borrower. Included in these electronic records of accounts
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are such typical records as a general ledger, a record of purchase orders,
cash disbursements, accounts payables, accounts receivables, cash
receipts and sales and the like. The next element is a data extraction
module which is indicated at 14. The data extraction module is explained in
more detail below.
The next element of the architecture is a web server 15, which
hosts an application server (ASP) 16 containing the financial information
processing software of the present invention. It can now be appreciated that
the use of an ASP is important to the present invention because while both
the capital provider and the borrower or enterprise can access the
information on the ASP neither is responsible either directly or indirectly
for
obtaining access to the others confidential fiinancial system and thus, each
are more readily able to use the system.
The ASP 16 is preferably divided into four modules. These
modules include a set up and data calibration module 17, a financial
analysis module 18, a reporting module 20 and a data presentation module
22. Each of these modules will be explained in more detail below. It will be
appreciated that four modules are shown for ease of explanatory only; more
or fewer could be used provided enough similar functionality was provided.
. Between the ASP and both tlhe capital provider such as a
lender and the enterprise, it is preferred to provide a secure firewall 23.
The
secure firewall can be of any type known in the art and will provide a way to
prevent unauthorized access to the confidential financial information by
either the enterprise, the lender or capital provider or any third party
hacker
or the like. An aspect of the firewall is pass code or other security access.
Shown at 24, 26 and 28 are various connection options for a
capital provider, such as a lender. These include, a standard web interface
24, a proprietary communication interface 213 or an integrated data access
interface 28. Because of security concerns the last is the least preferred,
but if security improves then it can also be used. Lastly, at 30 the output,
which may be generalized as cheque and purchase order control is related
to an account 32 which requires bank settlement.
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In general terms the most preferred form of the present
invention is for a system which is neither controlled by the capital provider
nor the enterprise but is one to which they both have access through the
secure firewall as shown. Most preferably the system is one having a data
extraction module, which comprises a software element which is configured
to enter into a businesses records database and extract relevant financial
information needed to permit the system tc> compare the position of the
enterprise after completing the proposed transaction to a permitted condition
for the enterprise to see if the proposed transaction is acceptable. The
present invention also comprehends, rather ithan a data extraction module,
a export module located on the enterprises' system which will extract and
export the relevant information as set out more fully below. In either case
the present invention comprehends the communication of relevant
information between the ASP and the enterprise and then, between the ASP
and the capital provider in the event ceri:ain conditions arise. These
conditions are defined in more detail below.
In this disclosure the term financial capacity is understood to
be the preferred financial state of the business enterprise defined by various
business measures. These measures may be set by a capital provider, such
as a financial institution or bank, or may be sE;t by the internal controls of
the
business enterprise itself. Examples of busiiness measures which may be
used to define a preferred financial condition include, lender covenants
relating to cash flow, borrowing capacity, allo~nred capital expenditures,
return
on sales, EBITDA, net profit, directors and officers remuneration, debt
service ratios, and timely payment of priority payments. In this sense a
priority payment is any payment obligation of a business which ranks ahead
in priority to any security of any one or more capital providers to the
business. It will be appreciated by those skilled in the art that while the
foregoing lists some of the most common business measures it is not
intended to be exhaustive and that there arE: many other measures which
also can be used to define a preferred financial condition for an enterprise.
As will be further understood by the following .description, once the
preferred
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conditions or measures have been defined then they can be used to define
a permitted cash position.
Figure 2 shows an algorithm for the determination of whether
to permit the creation of a disbursement from the company's cash flow 30.
While this will typically take the form of a chE;que 32, the present invention
comprehends other types of disbursements such as cash withdrawals, bank
drafts, and even future commitments such as purchase orders and the like.
This approval procedure is initiated by a request from the business for the
allocation of a cash disbursement. Such a request triggers an automatic dial
up to the ASP 33 server to make a cash available decision, which is
indicated in box 34. The actual determin<~tion of whether the cash is
available is set out below.
If the cash calculation is negative, meaning the cash is not
available, then the system generates a no payment report, shown at 35.
Essentially this means that the system has determined that to produce the
disbursement would put the enterprise outside of its preferred financial
capacity, such as outside of its loan margins or preferred operating ratios.
When this situation occurs, then a notice is sE:nt 36, for example, to the CF~
and anyone else who should be made aware: of this issue. Most preferably
the notice is sent by e-mail and would include a specific number of recipients
as desired.
In the event the capital provider has made provision for such
an occurrence, by for example setting up a schedule of default, overdraft or
other occurrence charges, these can then be communicated to the
enterprise to ensure that they are aware of the cost of proceeding with the
proposed transaction. As well, this devfault fee information can be
communicated to the capital provider 37 to allow them to identify the
consequences of the out of margin position. Access to historical data can
also be provided 38, 39. This is helpful to see if the default is an isolated
incident or a regular occurrence.
It will be appreciated that the out of margin occurrence should
not arise automatically, with the mere request for a cash transaction.
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However, the business executives should be .advised of the appropriate lack
of financial capacity and then given the option of delaying the transaction to
a later date. The system most preferable though also permits an executive
with sufficiently senior authority, such as a Cf=O or CEO to continue with the
transaction, with the default consequences and the notification to the capital
providers as noted previously. In the event that the default might arise, the
present invention aiso comprehends providing to both the enterprise and the
capital provider historical information relating to historical as well as to
future
financial capacity as explained in more detaiil below.
In the event the executives of the business, having received
the warning that the cash disbursement will be outside of their financial
capacity, and still wishes to proceed in light of the default fees, then the
present invention also comprehends that t:he capital provider could still
refuse to approve the transaction 40. Thus, according to the present
invention, because of the real time communication of the potential default to
the capital provider, before it is incurred, .and the ability of the capital
provider to determine the risk to its capital associated with such a default,
then, the capital provider is in a better position to determine whether to
approve the transaction and if so, whether to revise the loan covenants of
the business to take into account the higher risk.
In the event the capital provider approves the expense 42, then
the present invention comprehends an adjustment to the loan pricing 43,
and permits the payment to be issued to the payee 44. A further aspect of
the present invention is the marking of any approved cheque, before being
issued, with a mark to indicate that the cheque amount is pre-approved, for
example, by a lender. In this manner a recipient of the cheque will know that
the cheque is approved and valid. Such a marking may take the form of a
logo or printing on the cheque, or any other form of marking whether visible
or otherwise on the cheque, which will represent a certificate of validity and
a confirmed obligation to pay. While a cheque is generally understood as
a binding obligation to pay contractually, in the event of a default the party
out of pocket simply becomes another unse~:,ured creditor. Through use of
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the marking of the present invention, the recipient will have the benefit of
knowing, before even presenting such a cheque for clearance at their own
financial institution, that the cheque will clear and be approved.
Most preferably the present invention further includes a
scenario generator permitting both the enterprise and the capital provider to
run some "what if' scenarios. In this sense a what if scenario is one where
one or more of the underlying assumptions is changed and the financial
model rerun to determine the effect of the change. In this manner the effect
of what may be viewed as low probability events may be evaluated and
factored into any risk assessment. For example, there might be a large
receivable outstanding which is overdue at the time approval for a fresh
disbursement is sought. The what if calculator will permit calculations to be
made on the status of the business given various assumptions about when
the receivable is collected and about howmuch is collected. As will be
appreciated by those skilled in the art such a calculation in which the
financial capacity of the business can bE; tested against various fact
scenarios will be very useful in managing the: enterprise and evaluating any
capital risk. Essentially such what if scenarios will involve identical
procedures and calculations except that rather than using one set of
predetermined assumptions, other assumptions can be made, entered and
run and the change evaluated.
Figure 3 shows a flow chart for one method of calculating
whether the cash is available for the requested transaction. Beginning at
box 50 the question posed is whether there is cash available for the
proposed transaction. To answer this requires an investigation into the
financial capacity of the business which involves reviewing financial data on
a number of specific issues. These are set out in the next row of boxes and
include, for example, a bank margin calculation 52, a current ratio
calculation
54, a cash flow to debt servicing calculation .56, a debt to equity
calculation
58, a consideration of any other lender covenants 60 and a comparison to
the companies preferred operating criteria 64. (twill be appreciated by those
skilled in the art that the present invention comprehends permitting the
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company managers to establish a set of operating criteria which may in fact
be more conservative even than those estak>lished by the capital provider.
The present invention can thus be used as a preliminary warning system for
the managers of the business to identify potE:ntial problems before they be
come large enough to cause a default under <~ny capital restrictions such as
permitted margin, lender covenants, or the like.
As shown in Figure 3 the bank margin calculation may be
further divided into an allowed margin based on accounts receivables 66 and
an inventory allowed margin 68. Then the allowed bank loan can be
calculated at 70. At 71, any priority payiments which the business is
obligated to pay can be factored in and then the allowed bank loan can be
compared to the actual bank loan to see if the proposed transaction is
permitted at 72. Then the excess or surplus cash margin (if there is one) is
used as a determination of the cash availability 73 for the business after the
transaction. As well the current cash surplus can be used in a calculation
of future cash position 74 as set out in more detail below.
As shown at 76, the current ratiio can be calculated by dividing
the amount of the current assets by the amount of the current liabilities and
comparing the same to a predetermined allowed ratio. At 78, a calculation
of cash flow after debt service (CFADS) is made and at 80, a calculation of
debt service for a period, such as a year, is made. In this sense debt service
includes interest plus principle. At 82, using the results from 78 and 80 a
calculation of the CFADS ratio is made by diividing the cash flow after debt
service by the debt service amount. This ratio is then compared to the
permitted ratio. At 84 a debt to equity ratio calculation is shown which
involves dividing debt by equity and comparing the result to a predetermined
permitted or allowed ratio.
At 86 and 88 are shown calculation steps for other covenants
or company operating procedures which may apply to the specific business
in addition to the ones discussed above. Thus, it will be understood by
those skilled in the art that the present invention is not limited to the
specific
calculations discussed above and that therE~ are many others that can be
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used depending upon the specific business. However, each will be
characterized as being a calculation or tabullation of a specific aspect of a
financial capacity of a business which is then compared to a predetermined
value which is input into the system with a view to providing financial
information which may be used to manage a financial capacity of the
business. Thus, 89 represents the result that one or more of the above-
noted calculations identified a condition which is not met so the proposed
transaction can be avoided or deferred.
Some specific examples of lender covenant calculation
procedures are set out in Figure 4, including allowed capital expenditures
90, return on sales 92, the businesses earnings before income tax
depreciation and amortization (referred to as EBITDA) 94, net profit on sales
96, allowed officers and directors remuneration 98, allowed dividend and
shareholder distributions 100 and other requirements 102.
Thus, at 104 the calculated other lender covenants are
compared to the permitted or required values, or if not enough cash is
available, then a default condition exists at 106, and a no default if the
opposite result at 108.
Some specific examples of company operating criteria
calculation procedures are set out in Figurf: 5. For example, the margin
details and required covenant detail calculations 110, cost ranking 112,
market capitalization 114, average days inventory on hand or inventory turns
per year 116, average days sales in accounts receivables 118 are shown.
Other company criteria are represented by box 120. As previously indicated
the calculated amounts can be compared to tlhe preset or desirable amounts
and the result of the comparison shown and used by the business managers
to more effectively manage the business. This is indicated by box 121. For
example, if the proposed disbursement would put the company on the wrong
side of one of a desired value for any specific criteria, then the proposed
transaction can be disallowed at 122. Conversely, if the proposed
transaction is not one which results in any lform of default, then it can be
allowed at 124.
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Turning now to Figure 6, it can be seen that the present
invention contemplates more than the mere identification of present
conditions because it also provides for a calculation of the financial
position
of the business at any given point in the future. This is identified as a
future
cash flow calculation procedure which begiins at 130. The purpose is to
calculate the projected cash flow over a predE;termined period to ensure that
not only is the proposed transaction permitted at the moment, but that also
it will not result in a problem in the future. ThE: user is required to
specify the
period over which the calculation will be madle, as shown at 134. Thus, the
user will specify that cash flow is to be calculated for example, by day up to
thirty days, by week up to 90 days, monthly for six months or some other
period and frequency. Then the system will proceed with a calculation of the
future cash flow. The future cash flow calculation is based on various
assumptions which may be derived from historical data for the business or
from assumptions about future financial conditions as estimated by the user.
In addition to the future cash flow, the present invention contemplates
calculation of a future cash flow position, a future balance sheet, a future
income statement at 136.
The basis of the calculation is shown in more detail in Figure
6. For example, projected sales receipts 138, other cash receipts 140,
projected purchases or other cash disbursements 142 and other cash
disbursements 144 are included. The projected sales receipts can be used
to update projected accounts receivable at 146 and at 148 the projected
accounts payable are updated based on the projected purchases.
At 150 other cash disbursements are incorporated such as
payroll 152, deemed trusts 154 such as federal taxes 156, provincial taxes
158, state taxes 160 and realty and business taxes 162. There may be
other deemed trusts such as may arise are indicated generally at 164.
Standing payments are shown at 166, such as leases 168, rent 170, CAM
172, HVAC 174 and % rent, if any 176. Other payments 178 include federal
corporate taxes 180, state/provincial taxes 182, capital tax installments 184,
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loan principle payment 186, interest payment:188, capital expenditures 190
and contingency funds 192.
It can now be appreciated that the system is now in a position
to calculate a future cash available decision. Essentially the future cash
available decision is identical to the cash available decision as described
for
Figure 3, but instead of present condition:. cansiders future conditions.
Therefore the details of this calculation are not repeated here. As well the
future position against the other lender covenants as well as the future
position against company operating criteria can also be determined in a
similar manner to that discussed above in association with Figures 4 and 5,
with the exception that the future cash position is used in the calculations
rather than the present ones. The futurE; cash position calculation is
represented by box 137. If cash is available then no red flag or alarm is
generated at 139 whereas if cash is not available an alarm or alert is
generated at 141 and the default protocols rnay be initiated at 143.
Figure 7 shows the system algorithm for evaluating a purchase
order request. As will be appreciated by those skilled in the art the issuance
of a purchase order will create a legally binding obligation of the business.
Thus, the executives of the business as well as the capital provider have a
need to know if the purchase order can be met at the time it is issued. Thus
the present invention further contemplates determining the cash position of
the business in response to purchase order requests. In this case the
system is initiated upon the request from the: business to issue a purchase
order. In this case the business personnel gains access to the ASP and will
input in the relevant information about the puirchase order at 200. However,
prior to printing the purchase order a number of steps occur.
The first step 202 is to determiine the quality of the purchase
order, and thus price, quantity, shipping ternns, delivery date, and whether
approval is necessary can be checked. For example, the requested quantity
can be checked against the extent of the current inventory and projected
quantity required for the requested item. Thus, the inventory being ordered
is compared with the actual inventory on hand and usage based on sales for
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a particular period, for example, in terms of the number of days of sales of
the same. The total is then compared to the maximum allowable amount to
determine if the timing of the purchase and the amount of the purchase are
more than the permitted amount. If yes, the system proceeds to step 204
and if no, to step 206. Step 206 is a computational step which begins the
sequence of running future cash flow information and red flag procedures.
At step 204, the user will encounter a screen or interface that
indicates that the requested purchase order has been forwarded to the
relevant business executive for approval, consistent with the typical approval
process for purchase orders violating the permitted criteria. This
communication for approval, at 208, generated by the present invention,
preferably includes a summary of the inventory to assist the executive in
making the decision to approve. While this f:xample relates to inventory, it
will be appreciated that any capital expenditures and for purchase orders
may be compared to preset requirements and a appropriate accompanying
report prepared all of which is comprehended by the present system.
The next step at 210 is to run a future cash flow projection, to
determine if even though the quality of the purchase order is acceptable
whether because of pre-existing cash ouitflows the purchase puts the
business at some margin or covenant rislk. Then at 212, the system
calculates whether there will be any margin default, which if yes is
addressed at 214 and if no is addressed at 216. If yes at 214 then the
purchase order is forwarded within the company for final approval at 216.
Turning back to step 206, once the future cash position is
calculated then a decision is made at step 207 as to whether the proposed
transaction places the business outside of its financial capacity. If yes,
then
the purchase order is forwarded within the company to seek authorization
or approval at step 209. At 211 the step of attaching a note to the approval
request indicating future covenant default is shown. Then the approval
request is actually made at 216. If there is n~o future margin problem, then
the purchase order may be processed at 232.
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If step 230 is a no, at 220 then the executive can provide an
explanation of why not. If the calculation step at 212 indicates that a margin
covenant is at risk, then this can also be attached to the approval request to
the executive of the business so that an evaluation can be made prior to
issuing the purchase order. At 230 if the purclhase order has been approved
then it may be printed at 232 and sent to the supplier at 218.
It can now be appreciated how the present invention may be
used. Firstly, the business is allowed to log onto the ASP and to the system
of the present invention by being given acceas through the secure firewall
by means of a password or the like. At this time the data extraction module
will be initiated to go to the business records which comprises the electronic
records of account of the business to extract the relevant information to
ensure that the data in the system is current. As part of the sign on
procedure, the connection will be established to permit the system to identify
the business and to therefore recall and update the records that are specific
to that business. As indicated previously, the system will be preprogrammed
with the financial conditions for that enterprise, including, the operating
parameters established by the chief financial officer or the like as well as
the
conditions which may be established by any capital provider.
Once the secure link is established and the data extraction is
complete, then the system is ready for a new query from the enterprise. For
example, the accounts payable department may wish to know if they can
pay a particular account payable. The request is then made through a
series of user interface screens to the system. The system will provide an
answer and will most preferably also provide an indication of how close the
proposed transaction will put the business to any of the financial capacity
limits. Good results have been achieved when this is done by means of a
coloured indicator. Thus, if the transaction is clear then the screen remains
green; if the transaction places the business within say ten percent of the
limit, then the colour will be changed to amber and if the transaction places
the business outside of an limit then the colour can be changed to red.
CA 02331618 2001-O1-18
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It will be desirable to let the k>usiness, due to its own
requirements to conduct so called red transactions from time to time. Thus,
to permit this to happen, the system will require the information be entered
a second time in the same manner. This will also reduce the likelihood that
a false entry will be processed, in that with the second entry of the
transaction request any errors contained in the first one will likely be
corrected. The request for processing a red transaction will immediately
cause a message to be sent to the necessary supervisors, which may
include one or more of senior executives in the business itself and one or
more executives at a capital provider such as a IE:nder. The system will then
be available for analysing a number of issues such as the risk inherent in the
proposed transactions as calculated pursuant to various what if scenarios,
the terms of an lending agreement in terms of default fees and the like and
will then prompt a discussion of whether to modify the lending conditions to
comprehend the specific default situation.
It will be appreciated by those skilled in the art that the
foregoing description relates to preferred embodiments of the present
invention and various modifications and variations are comprehended within
the broad scope of the appended claims. ~~ome of these have been
disclosed above, while others will be apparent to~ those skilled in the art.
For
example, while reference has been made to certain types of financial
capacity calculations, other could also be used in addition to or instead of
the ones described herein, provided that the result in financial information
relevant to the financial capacity of an enterprise.
