How Lynk Capital cut a 12 day close to 3 and wired its loan servicing system straight into the ledger

Lynk Capital is a private equity backed firm that provides private lending, buys real estate, and acquires service businesses. 12 legal entities sit under it today with 4 more are on the way. Two things make its finance function unusual:

1. It is an SEC regulated RIA, so it sits through multiple audits every year

2. It has spent the last decade building its own proprietary loan origination and servicing software in house rather than buying it

The Problem

Lynk's structure generates constant intercompany activity. Funds lend, the management company charges, cash moves between entities, and every transaction has to be recorded twice and reconciled against itself.

On QuickBooks Online, that work was entirely manual.

"Prior to DualEntry, we used QuickBooks Online, manual entry via Excel, then a manual credit card system, and then our custom built in-house loan origination system," Crystal says.

The "due to" and "due from" entries were manual. Reconciliation between companies was manual. Even getting data into the separate files was manual, because the feeds that existed covered only part of the volume. Intercompany consolidation meant downloading from one QuickBooks file and keying it into another.

"The amount of time that it took us to do manual reconciliations was insane. It definitely added days on to our close."

Matt was watching the same problem from the other side of the org chart, where it showed up as a visibility cost rather than a time cost. "Prior to DualEntry, having the type of visibility into our enterprise that we require took a substantial amount of work, because our companies didn't integrate with each other effectively." The people who should have been managing the business were posting entries instead. "A significant amount of our time was spent simply doing postings and basic accounting level work for our intercompany transactions."

The close was averaging 12 days. Crystal knew that number was not going to survive Lynx's growth plan. "For me, the job felt like something we couldn't easily repeat and scale for the way that we were growing. We went through a couple month closes that had to be redone due to just our manual transfer data."

The Solution

An open API pointed at their own loan servicing platform

Lynk looked at the incumbents first. "Before we decided on DualEntry, we actually did look at a couple of different ERPs, like NetSuite and Sage, and just found them lacking in the ability that we needed."

A high volume of Lynk's financial transactions originate in the loan origination system Matt's team built, and no amount of feature checklist matters if that data still has to be exported and rekeyed. The API as a key deciding factor, alongside the AI running underneath the platform.

"The biggest reason that we ended up choosing DualEntry had to do with our in-house loan origination software. It was important to us that we had an open API capability to transfer some of our data."

Matt's read was the same one from a build-versus-buy perspective. "DualEntry was able to provide us with an easily accessible platform that allows us to integrate our existing business systems into our accounting platform. Their API is standards based, well documented, and allows us to integrate our existing systems." Lynk ran the whole implementation with its own people, on its own timeline, over about three months. "I think we probably could have gone faster if we had wanted to. The time frame was more on us and our availability versus DualEntry."

The migration itself turned out to be the easy part. "When we migrated our files from QuickBooks Online, it actually was fairly simple. It was verifying a couple balances and double checking some coding on transactions, and we were good." By go-live the team had already spent time in demos and the sandbox, so nobody was learning the system in production.

Lynk runs on now:

• Full API integration with the loan platform: all servicing data, all loan management data, and all investor accounts flow into DualEntry. "As soon as that transaction is posted into our loan servicing system or our finance system, it is fully integrated into DualEntry immediately, and we're able to fully reconcile our systems on a daily basis."
• Multi-entity consolidation: 12 entities in one platform, with intercompany transactions entered once instead of downloaded from one file and retyped into another
• API feeds across the rest of the stack: the same open API replaced the manual credit card process and connected the other software Lynk uses. "Now we have direct feeds across the board."
• Audit-ready consistency: integrated systems that reconcile to each other, for a firm that gets audited several times a year

Results

The close went from 12 days to 3 to 5. Intercompany consolidation now has one point of entry, and most of the time that entry comes from Lynk's own operating system rather than a person.

The reconciliation work that used to define Crystal's month is the piece that surprised her. "What went better than expected was the ease of being able to reconcile across our multi companies. That happened very much quicker than I thought it would."

For Matt, the payoff is a finance function that does not have to grow every time the portfolio does. "In many ways, the accounting function is a part of our organization that should and can be automated, and our goal is to operate our accounting staff with a minimal headcount." He measures the API in exactly those terms: "Having the API available, having it fully integrate with our systems, provides us with a platform that can scale without additional cost." The staff freed up from posting entries now spend their time on customer relationships and working with the servicing team to improve accounts receivable.

It has also changed how Lynk thinks about what it buys next. "With the time we've gotten back from using DualEntry, we've actually started shaping our forward thinking philosophy for businesses we purchase, because we know the capabilities that we have in house now." Matt spent a decade building software so his team would not have to do work a machine could do. "I dislike things that we can't automate, and I dislike things that require more human time than they should." His accounting system finally agrees with him.