Business Financing Insights The Importance of Audits in Asset-Based Lending
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Feb 5, 2025 A clear look at asset-based lending and how collateral like inventory and receivables are evaluated. Explains why frequent audits help track changing asset values and spot trouble early. Covers what inventory reviews reveal, the benefit of rotating auditors, and how audits promote transparency and readiness for growth.
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Asset Based Lending Focuses On Collateral Value
- Asset-based lending focuses on collateral value rather than overall financial statements.
- Mark Hafner explains lenders prioritize inventory, equipment, and accounts receivable as the loan's backing.
Use Audits As Preventative Business Checkups
- Treat audits as proactive checkups rather than burdens to catch problems early.
- Mark Hafner recounts an audit that flagged slowed inventory turnover, allowing the borrower to adjust before crisis.
Inventory Audits Reveal Operational Weaknesses
- Inventory audits reveal operational health beyond simple counts.
- Mark Hafner lists dead stock, turnover speed, and forecasting accuracy as things an audit exposes.