Automated Borrowing Base Calculation Engine

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Solution Overview

Problem

The existing systems for borrowing base calculations lack centralization and automation, leading to increased operational and credit risks due to delayed reporting, validation issues, and variances in calculated values, with the risk of using stale data.

Innovation Solution

The implementation of an end-to-end automated system for borrowing base calculations, which involves receiving and normalizing financial documents, extracting relevant information, calculating the borrowing base, and updating borrowing limits, using a computer program that integrates with borrower and lender systems.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If manual calculation and validation processes are used by collateral specialists and field examiners, then flexibility in handling disparate document formats is maintained, but operational risk and calculation variance increase

Engineering Contradiction:

Improvecalculation accuracyVSAvoidsystem complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent replaces manual mechanical processes (collateral specialists reviewing documents, field examiners validating calculations) with an automated computer-based system that performs document ingestion, data extraction, and borrowing base calculations electronically, eliminating human error and inconsistency

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The system is designed to handle multiple document types and formats (accounts receivable aging reports, accounts payable aging reports, inventory valuation reports, etc.) through a single unified platform, making the system universally applicable to various collateral documentation while maintaining consistent calculation methodologies

Inventive Principle:

Principle #6Universality (Multi-functionality)

2Reliability

If separate validation models are used by borrower and lender, then each party can independently verify calculations, but calculation variance and validation delays increase

Engineering Contradiction:

Improvevalidation accuracyVSAvoidvalidation time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The patent merges the borrower's and lender's validation models into a single shared computing system where both parties access the same calculation engine and data, eliminating discrepancies between separate models and enabling simultaneous validation without sequential delays

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The system implements real-time feedback mechanisms where calculation results are immediately available to both borrower and lender, allowing for instant verification and correction of any discrepancies without waiting for separate validation cycles

Inventive Principle:

Principle #23Feedback

3Ease of operation

If documents are received from borrowers in disparate ways including emails, then document collection flexibility is maintained, but operational risk and reporting delays increase

Engineering Contradiction:

Improvedocument submission easeVSAvoidoperational risk

Core Design Contradiction:

Ease of operationVSReliability

Solution Approach 1:

The system accepts documents through multiple channels (email, electronic upload portals, direct integration with borrower's accounting systems) while normalizing all inputs to a unified format, maintaining submission flexibility while ensuring consistent processing and reducing operational risk from disparate document sources

Inventive Principle:

Principle #6Universality (Multi-functionality)

4Reliability

If borrowing base calculations are performed periodically rather than continuously, then system simplicity is maintained, but credit risk increases due to stale data

Engineering Contradiction:

Improvecredit risk managementVSAvoidsystem complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The system implements continuous monitoring and calculation of borrowing base by automatically ingesting updated financial documents from the borrower's accounting system on an ongoing basis, ensuring the lending relationship always reflects current collateral values rather than periodic snapshots

Inventive Principle:

Principle #20Continuity of useful action

Data Source

PatentUS20250117847A1Systems and methods for end-to-end automation of borrowing base calculations

Publication Date: 2025.04.10 JPMORGAN CHASE BANK NA

AI summary

Systems and methods for end-to-end automation of borrowing base calculations are disclosed. A method may include a borrowing basis computer program: (1) receiving documents for collateral, assets, and liabilities from a borrowing system for a borrower; (2) extracting information for the collateral, assets, and liabilities from the documents; (3) calculating, from the information, a borrowing base for the borrower; (4) sending the borrowing base to the borrower system; (5) receiving, by the borrowing basis computer program, acknowledgement from the borrower system; (6) setting a borrowing limit based on the borrowing base; (7) receiving updated documents for the borrower; (8) extracting updated information from the updated documents; (9) calculating, from the updated information, an updated borrowing base for the borrower; and (10) setting an updated borrowing limit based on the borrowing base.