Payment Reconciliation

In structured finance facilities, cash flow integrity is paramount. Lenders need certainty that payments are accurately captured and allocated. Originators—particularly those operating revolving facilities—need efficient reconciliation that enables rapid cash recycling to maintain liquidity and fund new originations. Manual bank reconciliation processes create exactly the opposite: errors, delays, limited visibility, and bottlenecks that slow cash recycling operations.

Cascade's Bank Account Reconciliation solution transforms this process through automated transaction matching that validates every payment against the receivable data tape in seconds. The system processes thousands of transactions in minutes, automatically identifies discrepancies, and provides real-time visibility into cash flows—enabling originators to immediately redeploy collections while giving lenders confidence in payment accuracy.

Key Outcomes:

For Lenders: Verified cash flow accuracy, real-time payment visibility, and fraud detection through systematic discrepancy identification

For Originators: Automated reconciliation workflows, accelerated cash recycling for revolving facilities, improved liquidity management, and reduced operational costs

For Both: Transparent payment tracking, exception management, and comprehensive audit documentation

The Challenge: Bank Account Reconciliation in Structured Finance

The Critical Role of Payment Reconciliation

In asset-backed lending facilities, accurate reconciliation between bank accounts and receivable records forms the foundation of borrowing base integrity. Every payment received must be properly matched to the corresponding loan in the facility to:

Verify Collections: Confirm that expected payments are actually received

Detect Fraud: Identify unauthorized transactions or missing payments early

Calculate Availability: Update borrowing base calculations based on actual collections

Support Reporting: Provide accurate payment data for lender reports and compliance

Enable Distributions: Ensure proper allocation of collections according to facility waterfall

Enable Cash Recycling: Allow originators in revolving facilities to immediately re-deploy collected funds into new originations

Without proper reconciliation:

Lenders face risk: Undetected payment discrepancies can mask deteriorating collateral performance or fraud

Originators face inefficiency: Manual reconciliation creates operational bottlenecks and delays access to critical payment data

Both face disputes: Inconsistent reconciliation creates disagreements about payment allocations and borrowing base calculations

The Traditional Approach Falls Short

Manual bank reconciliation processes suffer from fundamental limitations:

Time-Consuming: Reconciliation staff must manually download bank statements, match transactions line-by-line against receivable records, and investigate every discrepancy

Error-Prone: Manual data entry and matching introduce mistakes that compound over time

Scalability Constraints: As loan portfolios grow, reconciliation workload increases proportionally, requiring additional staff

Delayed Detection: Issues are often discovered days or weeks after they occur, making remediation more difficult

Limited Visibility: Manual processes provide snapshot views rather than real-time monitoring

Cash Recycling Delays: Manual processes can take hours or days to complete, preventing originators from quickly redeploying collections into new loans

Inconsistent Standards: Different team members may apply different matching logic, creating inconsistencies

The Bank Reconciliation Dilemma

Lenders need real-time visibility into payment activity to monitor facility performance. Originators need efficient reconciliation processes that don't consume valuable operational resources—and in revolving facilities, they need same-day reconciliation to enable rapid cash recycling and maximize liquidity. Traditional manual approaches force a trade-off between thoroughness and timeliness, creating a bottleneck that limits an originator's ability to scale daily funding operations. The structured finance industry needs a solution that delivers both accuracy and speed.

The Cascade Solution

Cascade's Bank Account Reconciliation eliminates the trade-off between accuracy and efficiency through intelligent automation. Our platform serves as the cash flow verification layer in the master servicing workflow, ensuring that every payment is properly tracked, matched, and reported.

How It Works: The Reconciliation Flow

Data In: Automated Ingestion & Validation

Bank transaction data flows into Cascade through flexible integration methods:

Automated Bank Feeds: Direct API connections to banking platforms transmit transaction data in real-time or on scheduled intervals

SFTP Connection: Secure file transfer protocol enables automated, scheduled transmission of transaction files

Manual Upload: Standardized templates enable users to upload bank transaction files in pre-agreed formats (CSV, Excel, fixed-width)

Third-Party Integration: Data can be sourced from treasury management systems, payment processors, or other financial platforms

The system accepts transaction data containing:

Transaction IDs (unique identifiers for each payment)

Transaction dates and timestamps

Payment amounts

Account information (source and destination)

Transaction types and descriptions

Any additional fields defined in the data format specification

All data is validated upon ingestion to ensure completeness and format compliance.

Processing: Intelligent Transaction Matching

Cascade systematically matches bank transactions against the receivable data tape using transaction IDs as the primary matching key:

Exact Match: Transactions with identical IDs in both bank data and receivable tape are automatically matched and confirmed

Missing Transactions: Bank transactions without corresponding receivable tape entries are flagged as potential unallocated payments

Unreconciled Receivables: Receivable tape entries without matching bank transactions are flagged as missing or delayed payments

Amount Validation: For matched transactions, payment amounts are cross-checked to identify partial payments or amount discrepancies

The matching engine applies sophisticated logic to handle common scenarios:

Multiple payments on the same loan

Split payments across multiple transactions

Reversed or adjusted transactions

Payment application timing differences

Results: Exception Identification & Reporting

Discrepancies identified during matching are categorized and prioritized:

High Priority: Missing payments above threshold amounts, suspected fraud, or NSF returns

Medium Priority: Amount mismatches, delayed payments, or allocation errors

Low Priority: Timing differences, minor rounding discrepancies, or informational flags

Each exception includes:

Transaction details from both sources

Specific discrepancy type and description

Dollar amount impact

Age of exception

Recommended action

The Outcome: Real-Time Reconciliation Status

Within seconds of data ingestion, Cascade provides:

Match Rate: Percentage of transactions successfully reconciled

Exception Summary: Count and total value of unmatched items by category

Aging Analysis: Distribution of unresolved exceptions by age

Trend Analysis: Comparison to prior periods to identify emerging patterns

This real-time visibility enables proactive exception management rather than reactive cleanup.

Key Benefits

For Lenders:

Payment Verification: Systematic confirmation that expected collections are actually received, protecting against fraud or diversion

Real-Time Monitoring: Continuous visibility into payment activity enables early detection of performance deterioration

Borrowing Base Accuracy: Reconciled payment data feeds directly into borrowing base calculations, ensuring accuracy

Audit Confidence: Complete matching records and exception documentation satisfy regulatory and audit requirements

Risk Management: Automated discrepancy detection identifies potential issues before they escalate

For Originators:

Operational Efficiency: Automated matching eliminates hours of manual reconciliation work, reducing operational costs

Accelerated Cash Recycling: Real-time reconciliation enables same-day or next-day redeployment of collections into new originations in revolving facilities

Improved Liquidity Management: Instant visibility into collected funds and available borrowing capacity optimizes working capital deployment

Scalability: Handle high transaction volumes without proportional increases in reconciliation staff, enabling growth in daily funding operations

Faster Month-End Close: Accelerated reconciliation enables faster financial close processes

Exception Management: Clear categorization and prioritization of discrepancies streamlines resolution workflows

Cash Flow Forecasting: Real-time payment data improves cash forecasting accuracy and operational planning

For Both:

Transparency: Shared visibility into reconciliation status eliminates disputes about payment activity

Complete Audit Trail: Every transaction match and exception is logged with timestamps for compliance purposes

Standardized Process: Automated matching ensures consistent application of reconciliation logic across all transactions

Reduced Disputes: Clear documentation of payment activity and discrepancies minimizes disagreements

Proactive Resolution: Real-time exception identification enables immediate investigation rather than delayed cleanup

Demonstration: Consumer Loan Payment Reconciliation

The following demonstration illustrates how Cascade's Bank Account Reconciliation system processes daily payment activity for a consumer loan portfolio. This example uses fictional data to show the data ingestion, matching, and exception reporting workflow.

Note: All data, transactions, and account information in this example are fabricated for demonstration purposes only.

Reconciliation Scenario: Daily Payment Processing

Date: November 15, 2025
Facility: Consumer Installment Loan Portfolio
Bank Account: Collection Account #9876-543210
Reconciliation Frequency: Daily

Data Sources

Bank Transaction Data (5 transactions received)

Transaction ID	Date	Amount	Account	Type	Description
TXN-20251115-001	11/15/2025	$450.00	9876-543210	Credit	ACH Payment
TXN-20251115-002	11/15/2025	$325.50	9876-543210	Credit	Wire Transfer
TXN-20251115-003	11/15/2025	$275.00	9876-543210	Credit	ACH Payment
TXN-20251115-004	11/15/2025	$1,200.00	9876-543210	Credit	ACH Payment
TXN-20251115-005	11/15/2025	$550.00	9876-543210	Credit	ACH Payment

Total Bank Credits: $2,800.50

Receivable Data Tape (6 expected payments)

Transaction ID	Loan Account	Borrower	Expected Amount	Due Date	Status
TXN-20251115-001	LOAN-4532-8876	Johnson, Michael	$450.00	11/15/2025	Outstanding
TXN-20251115-002	LOAN-3421-7765	Martinez, Sofia	$325.50	11/15/2025	Outstanding
TXN-20251115-003	LOAN-5643-9987	Thompson, Lisa	$275.00	11/15/2025	Outstanding
TXN-20251115-004	LOAN-6754-1098	Anderson, David	$1,150.00	11/15/2025	Outstanding
TXN-20251115-006	LOAN-7865-2109	Williams, Jennifer	$425.00	11/15/2025	Outstanding
TXN-20251115-007	LOAN-8976-3210	Brown, Christopher	$200.00	11/12/2025	Past Due

Total Expected Payments: $2,825.50

Automated Matching Results

Match Status	Transaction ID	Details	Match Confidence
MATCHED	TXN-20251115-001	Perfect match: ID, amount ($450.00), and date align	100%
MATCHED	TXN-20251115-002	Perfect match: ID, amount ($325.50), and date align	100%
MATCHED	TXN-20251115-003	Perfect match: ID, amount ($275.00), and date align	100%
AMOUNT MISMATCH	TXN-20251115-004	Bank: $1,200.00 / Expected: $1,150.00 / Variance: +$50.00	Partial
BANK ONLY	TXN-20251115-005	Bank transaction ($550.00) with no matching receivable record	N/A
RECEIVABLE ONLY	TXN-20251115-006	Expected payment ($425.00) not found in bank transactions	N/A
NOT DUE TODAY	TXN-20251115-007	Past due payment ($200.00) not expected in today's reconciliation	N/A

Reconciliation Summary

Matched Transactions:

Successfully matched: 3 transactions

Total matched amount: $1,050.50

Match rate: 60% (3 of 5 bank transactions)

Exceptions Identified:

HIGH PRIORITY - Amount Mismatch (TXN-20251115-004)

Issue: Bank received $1,200.00, but expected amount was $1,150.00

Variance: +$50.00 overpayment

Loan Account: LOAN-6754-1098 (Anderson, David)

Recommended Action: Investigate overpayment; verify if prepayment, additional fee, or data entry error

HIGH PRIORITY - Unmatched Bank Transaction (TXN-20251115-005)

Issue: $550.00 payment received with no corresponding loan record

Possible Causes: Wrong transaction ID, missing loan data, payment from closed loan

Recommended Action: Research transaction ID; contact borrower if needed; determine proper allocation

MEDIUM PRIORITY - Missing Payment (TXN-20251115-006)

Issue: Expected payment of $425.00 from Williams, Jennifer not received

Loan Account: LOAN-7865-2109

Days Late: 0 (due today)

Recommended Action: Monitor for late payment; verify if payment was initiated but delayed

Processing Time: 8 seconds

Result: Reconciliation completed with 60% match rate and 3 exceptions requiring investigation. All discrepancies flagged for immediate review with clear prioritization and recommended actions.

Implementation Process

Cascade follows a structured onboarding approach for Bank Account Reconciliation services:

Step 1: Data Discovery & Format Definition

Initial consultation to understand payment flows, bank accounts, and data sources

Review of sample bank transaction files and receivable data tape formats

Identification of transaction ID structure and matching keys

Documentation of data field mappings and required transformations

Agreement on reconciliation frequency (daily, weekly, monthly)

Step 2: Integration Setup

Configuration of automated data transmission methods (API, SFTP, manual upload)

Development of data validation rules and format checks

Creation of matching algorithms based on facility-specific requirements

Setup of exception categorization and prioritization logic

Configuration of alert thresholds and notification workflows

Step 3: Exception Handling & Reporting Design

Definition of exception categories and priority levels

Development of exception aging and tracking processes

Creation of reconciliation report templates and dashboard views

Configuration of automated alerts for high-priority exceptions

Setup of historical trend analysis and KPI tracking

Step 4: User Acceptance Testing

Processing of test batch with historical transaction data

Validation of matching accuracy and exception identification

Review and approval of reports, dashboards, and alert configurations

Training on data submission, exception management, and reporting tools
Final sign-off and go-live preparation

Conclusion

Bank account reconciliation is the cash flow backbone of structured finance facilities. Traditional manual processes force a trade-off between accuracy and speed—creating bottlenecks that constrain liquidity and limit an originator's ability to rapidly recycle cash in revolving facilities.

Cascade's Bank Account Reconciliation eliminates this compromise through intelligent automation. By reconciling every payment within seconds, the platform enables originators to immediately redeploy collections into new originations while giving lenders real-time confidence in cash flow accuracy.

The result is a win-win:

Lenders gain verified payment accuracy, real-time cash flow visibility, and early fraud detection

Originators gain operational efficiency, scalability, accelerated cash recycling, and optimized liquidity management for revolving credit facilities

Both gain transparency, standardized processes, and complete audit documentation

In today's competitively structured finance landscape, the ability to turn collections into new originations within hours rather than days is a critical advantage. Cascade provides the technology infrastructure to make reconciliation both rigorous and efficient—enabling growth without compromising accuracy.