How to tick and tie a credit memo before committee
Tick and tie every figure in a credit memo to the financial statements and loan documents: a step-by-step method, common errors and the evidence to keep.
Key takeaways
- Figures drift between drafts. Tie each one to a source page before the memo goes to committee.
- Check period, unit and entity for every number, not only the value.
- Recompute every ratio from tied inputs and show the formula.
- AI-drafted memos need the tie-out more, not less: they read well even when a number is wrong.
A credit memo collects figures from audited statements, interim accounts, the term sheet, appraisals and the credit agreement. By the time it reaches committee it has been edited several times, and a number copied from an early draft can survive into the final version. Tick and tie is the discipline that catches it.
What tick and tie means
The term comes from audit. To tick a figure is to agree it to its source and mark it as checked. To tie it is to confirm it is consistent wherever it appears, and that totals add up. Applied to a credit memo, every number and factual statement ends up with a mark and a source.
What to tie, and to what
| Memo content | Source |
|---|---|
| Revenue, EBITDA, net income, cash flow | Audited and interim financial statements |
| Debt balances and maturities | Balance sheet and debt note; existing loan documents |
| Pricing, fees, amortisation | Term sheet or commitment letter |
| Covenant levels and definitions | The credit agreement |
| Collateral values | Appraisal or valuation report |
| Guarantor information | Guarantor financial statements |
A step-by-step method
- Freeze the version. Tie out the draft that will go to committee, not the one before it.
- List every figure and factual statement. Include numbers in the narrative, not only the tables.
- Find the source passage for each. Note the document and page.
- Check period, unit and entity. Fiscal year or trailing twelve months? Thousands or millions? Borrower or group?
- Recompute derived figures. Leverage, debt service coverage, loan to value and growth rates, each with the formula and inputs.
- Mark the result. Agreed, different, or not found in the source.
- Resolve every difference. Correct the memo or explain the difference in it.
- Keep the marked-up record. It is the evidence that the memo was checked.
The discrepancies a tie-out usually finds
- Interim figures in an annual column, or trailing twelve months mixed with fiscal year figures.
- Pre-adjustment numbers where the memo describes adjusted ones, or the reverse.
- Ratios computed on a different basis from the credit agreement's definition, such as gross debt instead of net debt.
- Pricing or fees from an earlier term sheet that changed in negotiation.
- Totals that no longer add up after one line was edited.
Each is easy to fix once found, and embarrassing when a committee member finds it first.
Why AI-drafted memos need it more
AI assistants are good at drafting memo sections from financial statements. The prose is fluent, which is exactly the problem: a figure from the wrong year or a ratio computed on the wrong base reads as convincingly as a correct one. Treat each figure in an AI draft as a claim to check against its source, the same way you would treat a junior analyst's first draft.
Tying out a memo with CiteLLM
Paste the memo section into ChatGPT or Claude, attach the statements and loan documents, and ask for every figure and statement to be checked. CiteLLM opens each one at its source passage:
- Supported figures show the line they came from, highlighted on the page.
- Calculated figures show the formula, with each input highlighted.
- Contradicted figures show the passage that disagrees, so the fix is obvious.
- Not in the document means no source was found, which is worth knowing before committee.
Your decisions on each figure are recorded, and the evidence report doubles as the tick marks for the file.
Frequently asked questions
What is the difference between ticking and tying?
Ticking agrees a figure to its source document. Tying confirms the figure is consistent everywhere it appears and that totals and subtotals add up.
Can I tie figures across several documents at once?
Yes. A CiteLLM review can hold up to 20 PDFs, each in its own tab, so statements, term sheet and agreement can be checked together.
Who should do the tie-out?
Ideally someone other than the author, before the memo is circulated to committee. The record should show who checked it and when.