Loans can be, by their nature, something of a high-risk business. There’s always an element of uncertainty and risk with regards to potential turnarounds on investment and loan opportunities. As such, LGC strives to help you ensure the protection and viability of your loans and investments by performing collateral examinations and field audits for you, examining and taking stock of your potential partner’s total collateral and more, and reporting our findings back to you. In economic times such as these, which cost-saving is, more than ever, a must, you may wonder as to the true necessity of a field audit.
WHY?
In the first place, several firms and banks require a periodic examination of the overall assets of prospective partners in order to ensure the viability of the loan. Field examinations may take place before or during the course of the loan, and can work to establish a risk portfolio, and may be conducted on the basis of the size or potential risk of the loan. In any event, assessing the collateral of the borrowing party is always a good idea (not to mention an oft-mandated one) and it’s in this respect that firms such as LGC are able to help, performing timely and efficient collateral inspections and reporting back to you, associated banks, or both. Field audits of these assets and collateral can take anywhere from one to five days to complete; set against the possibility of a bad loan which could set your business or accounting plans back by days, weeks, months or more, the importance of a proper field audit cannot be overstated.
FIXED VS. NON-FIXED ASSETS
The very nature of the assets or collateral in potentially in question is yet another reason why a field audit is worth investing your time and money. Fixed assets—ie, something such as real estate holdings or machinery—are less subject to daily fluctuation than non-fixed assets. As a result, periodic checks of these non-fixed assets is on the whole a pertinent proposition. What’s more, upon completion of a field examination, confidence between the two parties in the viability of these assets and collateral may be restored and, in turn, your bank or accounting firm will have the sound, solid data necessary to make an informed decision as to the future of both your prospective lending partners and any present or future loans.
Trust and compatibility are vital in any business transaction. Fixed assets, while subject to their own issues, aren’t as susceptible to day-by-day fluctuation and change as non-fixed assets. As such, when dealing with partners using non-fixed assets as collateral, or when screening a potential loan candidate according to risk factors, it’s important to have some transparency. You want to know that your partner has the collateral to back up your investment in his or her word. As such, a field audit by an independent firm such as LGC is a necessity—a small look now can save a big headache later.
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