Specializing in outsourced collateral examinations and other due diligence for the financial services industry.
At Swanson Financial Services we understand that we represent the lender during the examination process and take this responsibility seriously. We pride ourselves in bringing passion, professionalism, and integrity to every engagement. By working hard and maintaining a positive attitude our auditors provide an efficient examination experience for all parties involved. Adhering to these fundamentals ensures that Swanson Financial Services consistently produces a quality product that is also cost-effective.
COMMON QUESTIONS ABOUT OUR SERVICES
1. WHAT ARE THE PRIMARY REASONS FOR OBTAINING A COLLATERAL EXAMINATION? Both new business ("survey") and existing business ("recurring") exams:
Are considered a cost-effective approach to risk mitigation.
Determine and substantiate the condition, performance, and value of existing or future collateral.
Identify deteriorating situations, trends, or risks that may impact the lender - borrower relationship.
Provide feedback on the office dynamics. These intangibles tend to impact the overhead costs required for the credit facility on a long-term basis.
Are considered a favorable practice by bank regulators.
Ultimately provide recommendations on how to actively manage the collateral base and other pertinent variables to properly secure the credit facility.
2. WHAT SHOULD THE LENDER EXPECT DURING THE COLLATERAL EXAMINATION PROCESS? As a Swanson Financial Services customer, the lender should expect a seamless examination process from start to finish. Once the examination is ordered, we will contact your borrower/prospect to schedule and/or confirm the exam start date. Subsequently we send them a "request list" of items that are needed to complete the examination. From there we arrange a call with the borrower/prospect to answer any questions they might have regarding the "request list" or the examination process. When the examination field work begins, we give the lender daily updates on our progress via phone (or email if preferred). Upon field work completion we compile our exam findings into our top of line examination report and submit this to the lender in a timely manner. After submission we are available to discuss the findings and recommendations with the lender. We take great pride in our finished product and appreciate any opportunity to discuss the examination results with our customers.
3. WHAT SHOULD THE BORROWER EXPECT DURING THE COLLATERAL EXAMINATION PROCESS? We understand that audits can be stressful events for the borrowers as they attempt to fit the field work into their already hectic schedules. Our goal is to limit any inconveniences for the borrower by minimizing interruptions and allowing them to still conduct their daily business. We achieve this by sending "request lists" prior to our arrival and scheduling pre-examination calls to answer any questions they might have. Generally, full scope examinations include varying levels of analysis on accounts receivable, inventory, accounts payable, cash/bank accounts, payroll, taxes, insurance, financial statement composition and performance, and internal controls. Most borrowers will find that the majority of our audit requests consist of information that is readily available.
4. DOES SWANSON FINANCIAL SERVICES HAVE THEIR OWN EXAMINATION TEMPLATE OR DO WE HAVE TO PROVIDE ONE? Swanson Financial Services is proud to offer a first class examination template that we use to produce our end product. It can be adjusted to meet the needs of any lender. We are also happy to use the specific lender's examination template if one exists. We have extensive experience with both scenarios.
5. HOW MUCH DOES A COLLATERAL EXAMINATION COST? The cost of a collateral examination can vary significantly from one engagement to the next. The cost is ultimately determined by the time it takes to complete the examination (field work hours & report write-up hours) plus any applicable travel expenses. Generally, field work takes one to five days and write-up takes one to three days. The time needed is impacted by a combination of variables that includes the audit scope, borrower size & complexity, and borrower sophistication. Swanson Financial Services bills for services rendered on an hourly basis. We encourage our customers to call and discuss their needs in order to get a more accurate estimate of costs.
6. WHAT ARE THE DIFFERENCES BETWEEN A COLLATERAL EXAMINATION AND A FINANCIAL STATEMENT AUDIT?
CPA firms are engaged by their client (the borrower) to perform a financial statement audit. Certain testing is performed based on the auditors assessed level of risk and overall materiality determined for the entity. Materiality can be determined using percentages of net income, total assets, total revenue, or total equity. The general purpose of the financial statement audit is to give an objective opinion as to the fairness of management’s financial statement presentations and whether or not they conform with GAAP.
Collateral Examiners are engaged by the lending institution to perform a collateral examination. This ensures independence. The general purpose is to validate the risk of loss and default a lender may face by financing a company's operating needs based on accounts receivable and inventory. As a result, collateral examinations tend to include a more detailed analysis of accounts receivable and inventory. This enables the proper structuring of a borrowing base certificate by identifying ineligible collateral categories and calculating appropriate advance rates. Collateral exams typically focus on the most recent trailing 12 month period (can be 24 months, six months, etc.), whereas financial statements are based on the values at fiscal year-end. As such, collateral exams can be performed at any time during the year.
*** Please call with any additional questions you may have regarding the service offerings of Swanson Financial Services, LLC ***