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Collateral Review Audit & Survey
Lambert Smith Hampton offers a ‘Collateral Review’ service in respect of the Accounts Receivable collateral (‘AR’, ‘Debtors’, ‘Sales Ledger’).
This Collateral Review service (also referred to by some lenders as an ‘audit’) involves reviewing the company’s records, systems and procedures, and terms of sale, and reporting upon their suitability for an invoice financing facility. This can be undertaken prior to funding (a ‘survey’), or as part of a lender’s on-going monitoring.
As part of the Collateral Review process, particular attention is paid to the Accounts Receivable Key Performance Indicators (‘KPI’s’), including the AR ageing, AR dilution, AR debt turn, AR profile, and business seasonality.
Combined with this review of the Accounts Receivable KPI’s, sample testing is undertaken during the fieldwork, to include shipping testing, credit note testing, remittance advice testing, telephone debt verification, and contra-trading testing. This is to test the integrity of the information provided, and to establish whether the systems are robust enough for an invoice finance facility.
Collectively, the Lambert Smith Hampton ABL Services team has over 70 years’ experience in the invoice finance industry, and have recently undertaken Accounts Receivables review work in the UK, across Europe, in the USA, and in Australia.
Lambert Smith Hampton offers a ‘Collateral Review and Valuation’ service in respect of the Inventory collateral (‘Stock’).
As well as constructing the Valuation Model on a ‘forced sale basis’ (typically assuming a 60 day / 90 day marketing period) and calculating a Gross Orderly Liquidation Value (‘GOLV’) and a Nett Orderly Liquidation Value (‘NOLV’), we now undertake sample test counts, cost testing, gross margin testing, and retention of title testing, all of which are commented upon, with implications (and potential reserves) for the lender.
Our reports also include additional reserves and provisions in respect of the Enterprise Act, preferential creditors, Landlords lien, and other potential erosions relevant to a lender.
Exit strategies, on-going monitoring requirements, and collateral covenants are all suggested and commented upon also.
We also offer a ‘Collateral Review’ service only (i.e without the Collateral Valuation component) in respect of Inventory, which typically runs alongside the Accounts Receivable Collateral Review service described above.
Plant and Machinery:
Lambert Smith Hampton offers a valuation service for banks and secured lenders who are considering utilising a company’s plant and machinery as collateral for funding.
We inspect and value the assets at all of the company’s premises and provide a detailed asset schedule, highlighting those assets which are third party owned, or subject to existing finance arrangements. Our report and valuation incorporate current market conditions and will include strategy commentary. All plant valuations are undertaken or reviewed and approved by one of the firms many RICS qualified valuers.
In addition we are often asked to provide identification plates for a secured lender and to undertake re-valuations on a cyclical basis.
We specialise in providing loan security valuation advice on commercial and larger residential real estate and many specialist properties. These valuations are on both investment and owner occupier bases and include.
We pride ourselves on the quality of work and service we provide. Our strength is in the wide range of specialist areas we cover and the ability to link with other divisions within the firm to provide a complete appraisal of the asset.
Collateral Review Audit & Survey
At Lambert Smith Hampton we have a team of specialists who have been providing this service for the Asset Based Lenders for many years now. Conducting both pre–lend and cycle Collateral Reviews in the UK and across Europe.
Within a Collateral Review of the Receivables we would comment upon the quality of the customer base, historical trends in respect of dilution, age of the Receivable and payment history. A full systems review would comment upon the quality of the documentation validating the Receivable, testing the Proof of Delivery and suggesting improvements that should be made to support an Invoice Finance facility.
For a Collateral Review of the Inventory we review the accounting records and systems associated with all elements of the Inventory, Raw Materials, WIP and Finished Goods. Tests are undertaken to confirm the true cost, gross margin and that all important test count identifying if the Inventory is there.
A Collateral Valuation of Inventory will provide the lender with a comprehensive and detailed valuation, culminating in a Gross and Net Orderly Liquidation Value whilst highlighting those reserves and provisions that a lender would need to consider when structuring their facility. Extensive fieldwork is conducted and current and historical accounting information is analysed by a team of experienced Inventory valuers and industry experts.
Your Collateral Valuation requirements can be met at Lambert Smith Hampton provided through a single source both in the UK and Europe, irrespective of the asset class and location.