Preparing Your Data Room

Two things make a diligence process easier to run: one clearly stated as-of date for the portfolio extracts, and a loan tape that ties to your general ledger. Get those right and a large share of early questions become answerable from documents already in the room. Get them wrong and you spend time explaining differences instead of explaining your credit. Neither item decides the whole timeline, which also depends on the provider's process, third parties and how many open items your book generates.

Fix the as-of date before you export anything

Pick a portfolio cutoff and pull the portfolio extracts on that basis: the loan tape, the receivables balance from your general ledger, delinquency and roll-rate reports, and collections and charge-off detail. For each file, record when it was generated, from which system, and by whom. Put that metadata in the file name and repeat it on a cover sheet at the top of the room.

Not every document in the room shares that date, and pretending otherwise creates its own confusion. Credit policies carry their own effective dates. Legal contracts are dated when executed. Audited accounts follow a statutory period. Bank statements cover calendar periods that will rarely align with your chosen cutoff. Label each file with the date or period it genuinely covers, and reserve the single cutoff for the portfolio extracts that have to reconcile to one another.

The usual failure is mundane rather than dramatic. The tape is struck at month end, the delinquency report is run when somebody gets to it the following week, and neither ties to the collections detail. Nothing is wrong with the portfolio. The analyst on the other side simply cannot tie three numbers together, and the questions that follow were never about credit quality.

When you refresh, refresh everything that depends on the new cutoff. That means the portfolio extracts and the reconciliations built on them, not the entire corporate archive. Keep a version map showing which files belong to which cutoff, and a short changelog recording what moved and why. Refreshing the tape without refreshing the delinquency report leaves two files that disagree with no record of which one is current.

Build folders around decisions, not around your file system

A capital provider is not browsing. Each reviewer is closing out a specific question, and the room should be organised so every question has an obvious home and a named owner.

Two rules keep the map honest. If a folder does not support a decision somebody has to sign off, it is filler and it dilutes attention. And if a decision has no folder, you have found a gap before the provider does, which is the cheapest time to find one.

Reconcile the tape to the ledger and show your work

In a fictional portfolio, the general ledger shows a receivables balance of USD 10.0m at the cutoff and the loan tape totals USD 9.8m. The USD 0.2m difference is not a missing asset. The tape carries the cutoff as its claimed as-of date, but it was extracted three business days later without a retrospective filter, so it reflects principal collections that posted during that window. The ledger balance was struck at the cutoff itself. The two files therefore have the same label and different effective dates, which is the point the reconciliation has to make explicit.

Note that only principal collections belong in that reconciling line. Interest and fee receipts posted in the same window do not reduce principal, so including them in the USD 0.2m would produce a number that reconciles to nothing.

The resolution is procedural, not creative. Re-run the tape with a proper as-of filter so both figures sit on the same date. If your servicing system cannot produce a retrospective extract, keep the later file, relabel it with its actual effective extract date rather than the claimed cutoff, and supply item-level detail for the USD 0.2m so the difference reconciles payment by payment. Then state plainly which date is the contractual cutoff for the transaction, because that date will end up in the sale documents and the first borrowing base calculation.

Do not book a balancing entry to force the totals to agree. A plug turns a timing question into a controls question, and controls questions tend to be answered with tighter terms. If part of the difference stays unexplained, record the amount in the room and name the person working it. An open USD 20,000 with an owner against it is easier to defend than a tidy total nobody can reproduce.

This is the same discipline you will apply every month once the facility is live, when the borrowing base certificate has to tie back to the same underlying data. Practising it during diligence is cheaper than learning it under a reporting deadline with a draw pending.

Control access and keep raw identifiers out of the room

Grant access by role rather than by firm. Credit reviewers need the tape, performance data and policy documents. Legal reviewers need entity documents, material contracts and consents. Very few people need loan-level personal data at any point, and the ones who do usually need it for a defined file sample rather than for the whole book.

Use separate stable pseudonymous loan and borrower identifiers. Keep the loan reference consistent across refreshes, and use the borrower reference to aggregate multiple loans without revealing personal identifiers. Hold the mapping to raw personal identifiers separately, outside the room, and release it under an agreed process to a named reviewer for an agreed sample.

Set download rights proportionately rather than switching them off across the board. A legal reviewer marking up a contract or an auditor testing a sample may reasonably need a local copy, while a broad portfolio file containing sensitive detail does not need to leave the room at all. Keep the audit trail switched on, and remove access when a process ends rather than leaving permissions open for years. What you may share, in what form and with whom is a question for your counsel and privacy adviser, and it is worth asking before the room opens rather than midway through a review.

Keep the room alive after it opens

Three habits carry a room through a live process without it degrading into a shared drive.

• Log every question with a number, the requester, an internal owner, a due date, the answer given, and the document that supports it. The log becomes your closing checklist later.
• Version files rather than overwriting them. Publish v2 with a date and a one-line change note, and leave v1 visible so anyone who worked from it can see what moved.
• Agree a refresh cadence in writing with each provider and hold it. Missing a promised refresh costs more credibility than the underlying data usually deserves.

Assign one person to own the room end to end. Not a committee, and not whoever happens to be free. Rooms deteriorate when three people upload files under three naming conventions and none of them owns the index.

Before you send the invitation

• Confirm the cutoff date and check that every portfolio extract uses it, and that other documents carry the date or period they genuinely cover.
• Run the tape to ledger reconciliation and save it as a document in the room, not as an email attachment somebody has to hunt for.
• Check every folder has a named owner and that the owner has actually read what is inside it.
• Confirm masking is applied and the key sits outside the room.
• Send the index and the reconciliation alongside the invitation, so the first impression is that your numbers already tie.

The tape deserves its own preparation before it lands in folder 01, and field definitions, identifiers and roll-forward checks are covered in your loan tape. How reviewers will actually work through the room, track by track, is set out in the diligence process.