By Brian Smith, Co-Founder and Managing Partner
Even the strongest borrowers can present risk if collateral reporting isn’t reliable. Identifying early warning signs protects lenders from potential loss and borrowers from covenant issues.
Common Red Flags
- Unexplained variances between financial statements and borrowing base certificates
- Frequent customer disputes or credit memos that mask receivable dilution
- Significant inventory write-offs or obsolescence
- Rapidly growing or shrinking AR balances without matching sales trends
- Unusual related-party transactions or offsets
How LCG Detects Risk Early
Our team performs trend analysis, reconciliations, and transaction testing to uncover inconsistencies before they become losses. We also assess the borrower’s reporting systems and control environment for reliability.
Why Independent Insight Matters
An external examiner brings objectivity and experience across industries, helping lenders see issues internal teams may overlook.
Conclusion
Recognizing red flags before they escalate is key to protecting collateral value. LCG delivers the insight lenders need to act decisively.
For any questions regarding collateral risk assessments, contact David Ruhlig at druhlig@lcgadvisors.com.