ABL Field Exam or C&I Asset Quality Review

Which is right for your transaction?

Traditionally, Banks monitor collateral for their Asset-Based Loans via a monthly A/R aging report, inventory report, and borrowing base certificate (BBC) to determine if the loan is within approved advance limits. Should a loan default or the borrower cease operations, the Bank would need to liquidate the inventory and receivables detailed on the provided monthly reports. Without verifying the accuracy of the Borrower’s reporting, the Bank has no assurance of the value of their collateral. The primary way to gain confidence in the accuracy of collateral reporting is through the completion of an ABL Field Exam.

Information & Analysis Provided in a Field Exam:

  • A/R: historical collection rates | dilution | turnover | bad debts | GL accuracy.
  • Borrowing Base Certificate Review
  • Inventory: turnover | shrinkage | slow-moving analysis | cost testing | test counts.
  • Cash: cash tracing | payroll tax payment verifications | non-A/R cash sources.
  • Financial Statements: four-year lookback | profitability changes and drivers | analysis of distributions and retained earnings.

These data points and other operational practices are analyzed through our lens of extensive experience in Field Exam completion.  Conversations with personnel at the Company are integrated into the report to give critical context rather than elevator analysis. The Bank can expect a comprehensive narrative of risk, as well as a list of action items based on the findings.

Asset Quality Review (AQR) for C&I Loans

  • Bank Advisors has developed a limited-scale alternative to a traditional ABL Field Exam, an Asset Quality Review or AQR. This report provides your Bank with an expert analysis of your Borrower’s current accounts receivable and inventory records, while offering a right-sized cost and scope tailored to your C&I Borrower.  In many cases, the cost of an AQR can be less than half of a traditional Field Exam as the scope is limited to a review of only the most recent month-end’s collateral reports.

Information & Analysis Provided in an AQR:

Testing only the most recent month-end A/R and/or Inventory reports:

  • A/R invoice reviews and payment verifications.
  • Inventory test counts – onsite or remote.
  • Inventory vendor invoice review.

Information is presented in narrative format, incorporating borrower conversations and Field Examiner observations of processes and procedures.  The findings are used to provide the Bank with a general risk analysis and recommendations to improve reporting.

Which Report is Best for Your Borrower?

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  • Why Choose Bank Advisors?

    • Developed for Community Banks and their Borrowers
    • Diverse experience with manufacturers and service providers
    • Expertise with contractor and medical receivables
    • Takeovers and prefunding field examinations
    • Recurring field examinations
    • Collateral monitoring engagements
    • Workouts and liquidations

Allow our team of credit and collateral professionals to bring clarity to your decision making. We have a wealth of experience in every facet of asset-based lending and a deep bench of highly experienced field exam professionals. Ours is a dynamic consultancy scaled to provide direct communication lines with you, our bank client, as well as your valued customers.

Our utmost objective is to provide actionable recommendations regarding the collateral securing the bank’s debt. We strive to bring value not only to the bank but also to inform your borrower of best practices regarding their collateral reporting.

Contact us today to request samples of our ABl Field Exam or Asset Quality Review reports or to find out more about how we can serve you.

Meghan McGuire
mmcguire@bankadvisorsltd.com
(847) 322-0175

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