Enhancing Property Development Financing with Solver Cloud

Background

In the competitive field of property development and management, companies often face the challenge of navigating complex financing processes for major construction projects. One such company sought to streamline their operations and improve their financial modeling to better manage interest payments associated with their bank loans.

Challenge

The development company relied on operational data sets that were distinct from their General Ledger data. This separation posed difficulties in accurately modeling financing, particularly regarding bank facilities and swap rates, which are critical sources of funding. The actual interest rates were tied to the Reserve Bank’s 90-day Bill Rates, and understanding how to incorporate swap rates into the financial model was initially daunting.

Solution

Solver Cloud emerged as a powerful tool to address these challenges. With its flexibility and specialist capabilities, it enabled the development company to build a comprehensive funding model.

The solution involved creating three budget templates along with a final Profit & Loss report:

1. 90-Day Bill Rates Template: This template served as the primary driver for the other two templates.
2. Bank Facility Template: Updated with the latest 90-day Bill Rates.
3. Banking Swap Rates Template: Also updated concurrently with the new rates.

The process was straightforward: once the 90-day Bill Rates were saved, users could open the Bank Facility Template, apply the new rates, and save the data. This was replicated for the Swap Rate Template, ensuring both interest templates accurately reflected the total interest costs in the General Ledger.

Implementation of Input Flow

A significant enhancement provided by Solver Cloud was the introduction of the Input Flow function. This feature streamlined the data entry process. With Input Flow, users only needed to enter data in the 90-Day Bill Rates template. The Bank Facility and Swap Rate templates would automatically update their calculated values at the database level, significantly reducing the number of steps required and increasing data accuracy.

Results

The implementation of Solver Cloud allowed the development company to efficiently manage their financing model, resulting in:

• Enhanced accuracy in interest cost calculations.
• Streamlined processes that reduced manual entry and potential errors.
• Improved overall efficiency in financial operations.

Conclusion

By leveraging Solver Cloud, the property development company successfully transformed their approach to financing major construction projects. The solution not only simplified the modeling of interest rates but also provided a robust framework for ongoing financial management, ultimately leading to better decision-making and improved operational efficiency.

Outcomes

Saved 8-12 hours, reducing month-end reporting from 5 days to 3.

Eliminated 8-12 hours of manual processing for one accountant, resulting in reduced pressure during month-end financial reporting.