Field Exams
Independent collateral field examinations that help asset-based lenders confirm the borrowing base before funding and monitor it throughout the life of the loan.
Overview
An asset-based loan is only as sound as the collateral behind it. Field exams give lenders an independent look at whether the receivables, inventory, and other assets reported on a borrowing base certificate actually exist, are collectible, and are valued correctly. Pease Bell performs pre-funding and recurring field examinations for banks, finance companies, and private credit lenders. Our examiners test the borrower’s reporting against source records, trace cash through the collateral cycle, and identify the issues that can erode availability before they turn into losses.
Because we are a full-service CPA firm with audit, tax, and advisory under one roof, our examiners bring an accountant’s understanding of how general ledgers, aging reports, and inventory systems are built. That helps us spot reconciling items, cutoff problems, and reporting shortcuts that a checklist review can miss. Reports are written for credit officers and portfolio managers: clear findings, quantified exceptions, and practical recommendations on eligibility and reserves.
What Our Field Exams Cover
Borrowing Base Testing
We recompute the borrowing base certificate from the borrower’s records, test eligibility criteria and advance rates as defined in the loan agreement, and quantify any overstatement of availability.
AR and AP Aging Review
We reconcile receivable and payable agings to the general ledger, test concentrations, cross-aging, contras, and past-due balances, and review the quality of the customer base supporting the line.
Inventory Examination
We review perpetual records, costing methods, slow-moving and obsolete stock, in-transit and consigned goods, and observe or test counts to support inventory eligibility and valuation in the borrowing base.
Dilution Analysis
We measure credits, returns, allowances, write-offs, and other non-cash reductions to receivables over time so lenders can set advance rates and dilution reserves based on the borrower’s actual history.
Cash Proofs and Collections
We trace sales to invoices and collections to the lender’s account, test the cash cycle, and look for diverted payments, unapplied cash, or other breaks in collateral control.
Pre-Funding and Recurring Exams
We perform initial exams to support underwriting and new facilities, then recurring exams on the schedule your credit policy requires to monitor collateral over the life of the loan.
Collateral Risks We Help Lenders Identify
- ✓Borrowing base certificates that overstate eligible receivables or inventory
- ✓Rising dilution that is not reflected in current reserves
- ✓Customer concentrations and cross-aged accounts that weaken collateral quality
- ✓Inventory records that do not reconcile to the general ledger
- ✓Collections bypassing the lockbox or controlled deposit account
Frequently Asked Questions
What is a field exam in asset-based lending?
A field exam is an independent review of the collateral supporting an asset-based loan. The examiner tests the borrower’s borrowing base certificate, receivable and inventory records, and cash collections against source documents. The goal is to confirm that reported collateral exists, meets the eligibility terms of the loan agreement, and is being reported accurately, so the lender can rely on the availability it is funding.
What is the difference between a pre-funding exam and a recurring field exam?
A pre-funding exam is performed before a new facility closes to support underwriting, advance rates, and eligibility definitions. A recurring exam is performed periodically after closing, often on a schedule set by the lender’s credit policy or the loan agreement, to monitor whether collateral quality, reporting accuracy, and controls have changed since the last review.
What is dilution and why does it matter to lenders?
Dilution is the reduction in receivables from causes other than cash collection, such as credit memos, returns, discounts, allowances, and write-offs. It matters because each diluted dollar is a dollar of collateral the lender advanced against but will not collect. Measuring dilution over time helps lenders decide whether advance rates or reserves need to be adjusted.
What do lenders receive at the end of a field exam?
Lenders typically receive a written report that summarizes the scope of work, the recomputed borrowing base, testing results for receivables, inventory, and cash, and any exceptions found. Good reports quantify the effect of each finding on availability and include recommendations on eligibility, reserves, or reporting changes the credit team can act on.
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