Asset Based Lending Field Examinations

As a commercial and asset based lender, you share the accountability for the quality of your institution’s loan portfolio. PriceKubecka offers to our commercial lenders and prospective clients our knowledgeable field examiners who are prepared to evaluate and monitor your borrower’s loan collateral.

PriceKubecka offers outsourcing field examination services to asset-based lending and other financial institutions that have a need for granted loans, increased credit lines, reduced credit lines, or reduced loan loss exposure. Since the financing or working capital needs of the borrower may change on a daily basis, the findings of a field examination help in making well informed decisions. Our objective is to assist lenders in evaluating the integrity of their customers’ collateral by performing pre-loan surveys and rotational collateral field examinations. Our service is designed to help supplement the financial institution with high-level expertise so as to assist the lender in protecting its assets and provide a thorough and impartial examination of the underlying collateral asset quality, cash flows, internal controls and repayment analysis.

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Field examinations may also benefit the borrower, since the results can supply the lender with additional information and analysis required to support an increase in additional funds requested and/or improve the borrowing certificate structure.

We develop, in conjunction with the financial institution, a customized program of field examination tests and procedures and provide an agreed-upon-procedures report at the conclusion of each engagement.

Our field examinations encompass numerous conditions/phases of credit, including:

The collateral field examination general scope of work includes analyses of accounts receivable, inventory, accounts payable, cash, payroll taxes and insurance. Financial statement and general ledger analyses are also part of the overall scope of work. These individual areas may include an expanded or narrowed scope depending on the situation.

  • Pre-loan surveys and recurring field examinations.
  • Assessment of collateral exposure and advance rates.
  • Evaluation of accounting procedures and financing reporting capabilities.
  • A determination of the age of all receivables through data manipulation.
  • A determination of any underlying “non-invoices” included in the aging, such as debit memos, unapplied payments, unpaid balances, or any evidence of cash accounts, which would serve to be included as “reserves” and deducted from the lending base.
  • An understanding of the client’s system to determine whether their system would create situations of pre-billing and therefore, pre-assigning to the lender.
  • An understanding of the borrower’s accounts receivable and shipping terms.
  • A determination of the age of inventory through data manipulation and extraction in order to obtain a slow-moving analysis.
  • A determination of the turnover of inventory and, therefore, understanding of the seasonal/cyclical periods affecting the business, thereby determining the high and low advance periods in the client’s borrowing life.
  • An understanding of the potential borrower’s inventory by location and whether “control” over the inventory can be obtained.
  • An understanding of the potential borrower’s goods in transit and their payment method to determine at what point the ownership has transferred to the borrower and whether such inventory can be included in the lending base.
  • A quick analysis of the company’s cash disbursements to gain an understanding of their vendor relationships and whether any vendor pressure is noted.

At PriceKubecka, our team is experienced, and as a group has been involved and
performed field examinations on most industries including out of the box type
industries.  Our experience allows us to get behind the numbers and provide you with a meaningful final deliverable.

Customized Asset Based Lending Field Examination Services

We customize our asset based lending field examinations to suit the client and the loan facility. Experience gives us the ability to adjust our work in the field and respond to events and problems as they occur. We are mindful of the sensitivity clients have concerning audit fees and focus our attention on efficiency and effectiveness by managing costs and providing value to everyone that works with us.  We also make an effort to individually understand each of our client’s idiosyncrasies and what is important to them as it pertains to the field examination and report.  Our team of examiners will communicate with the appropriately determined client professionals so as to perpetually keep you informed of the progress and potential issues encountered during and post field examination.

Field Examinations vs. Audited Financial Statements

Even though, audited financial statements are an important source of information, they are not intended to provide specific insight into the collateral value or liquidation worth. Audited financial statements communicate collateral value at year-end only. Whereas, field examinations identify collateral variations during the year or the most current lendable values, for example, increasing or decreasing trends. Audited financial statements do not provide adequate data to help the lender correctly evaluate their client’s credit worthiness.

PriceKubecka can identify categories of ineligible collateral and determine suitable advance rates. Our assessment is independent since we are engaged by the lending institution, not the borrower.

More Information

For additional information on how PriceKubecka can help your organization or questions about asset based lending audit services, please call us at 972-888-0950.