Glossary · underwriting

Field exam

Also called field audit, collateral exam, collateral audit.

A structured review of a borrower's receivables, payables, inventory and books, performed before an asset-based or factoring facility funds and repeated periodically afterward.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

An examiner, in person or remotely, ties the accounts receivable aging to the general ledger and to the invoices behind it. From there the tests are predictable: dilution over a trailing period, concentration by customer, cash application practices, credit memo history, contra relationships where a customer is also a supplier, and the payables aging with particular attention to unpaid payroll taxes.

Inventory facilities add counts, costing method review and a look at obsolescence. Everything is written up in a report the credit committee reads alongside the financials.

The borrower pays. Exam fees are usually billed per examiner per day plus expenses, and the frequency after closing depends on facility size and how the account performs.

Where this one catches people

Exam findings change availability, not just the lender's opinion. A contra relationship nobody disclosed, or an IRS installment agreement discovered in the payables, can make a large slice of the borrowing base ineligible the day the report is issued. The line shrinks immediately, sometimes into an overadvance the borrower has to cure with cash it does not have.

Where you will meet this term

Business Line of Credit Invoice Financing Asset-Based Lending

Read next

Borrowing baseThe pool of eligible collateral, each class multiplied by its own advance rate and reduced by reserves, that … ConcentrationHow much of a business's revenue or receivables depends on a single customer, and the cap funders place on ho… DilutionThe gap between what a business invoices and what it eventually collects, caused by credits, returns, allowan… Eligible receivableAn invoice that counts toward the borrowing base because it passes the lender's tests on age, customer, conce… Fee scheduleThe exhibit listing every charge a facility can incur outside the headline rate: wires, lockbox, minimums, au… OveradvanceFunding beyond what the borrowing base formula supports, extended as a temporary and usually discretionary ac…

Field exam — common questions

What does field exam mean?

A structured review of a borrower's receivables, payables, inventory and books, performed before an asset-based or factoring facility funds and repeated periodically afterward.

Where does field exam catch people out?

Exam findings change availability, not just the lender's opinion. A contra relationship nobody disclosed, or an IRS installment agreement discovered in the payables, can make a large slice of the borrowing base ineligible the day the report is issued. The line shrinks immediately, sometimes into an overadvance the borrower has to cure with cash it does not have.

Is field exam the same as an interest rate?

Field exam is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does field exam apply to?

Business Line of Credit, Invoice Financing, Asset-Based Lending.

Is there a worked example of field exam?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside field exam?

Borrowing base, Concentration, Dilution, Eligible receivable, Fee schedule.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.