Issue
The client is an energy company whose Credit team relied on spreadsheets to compensate for a faulty credit system.
The Credit System was generating incorrect Margin Calls and Callbacks:
- Wrong margin values potentially exposed the client to millions in credit risk.
- Analysts spent hours daily on manual workarounds the system could not handle.
- Repeated vendor upgrades and patches had failed to fix the problem.
Solution
Our consultant stabilized daily operations while driving the vendor to a real fix:
- Provided daily technical support to the Credit and Contract teams.
- Worked with the vendor to correct the margin calculations and automate margin letters.
- Supported test-case development and UAT for plus/minus exposure on inbound and outbound collateral.
Result
The system had generated incorrect margin values an estimated 75% of the time; automating the process saved about $25,000 a year - before counting the credit-risk exposure it removed.
Correct margin calls and automated letters turned a demanding stakeholder into a believer and removed millions in potential unquantified exposure.
“Your consultant’s effort and more importantly, results, have turned a demanding stakeholder into a believer.”
Program Manager
Energy Company
Key Takeaways
- An incorrect margin calculation is a credit-risk problem, not an IT ticket. With the system producing wrong margin calls an estimated 75% of the time, fixing the calculation and automating margin letters removed a $25,000 annual workaround cost and, more importantly, millions in unquantified exposure.
- When vendor patches keep failing, put an expert between the vendor and the business. Disciplined root-cause work plus real user-acceptance testing is what finally resolves defects that erode trust - transferable to any team margining collateral on faulty software.
Ready to do the same?
If your credit system's margin calls cannot be trusted, MidDel works the defect with your vendor until the numbers are right. Let's talk.
