What the examiner actually walks
Open invoices versus the aging. Credit memos and offsets. Consignment and customer-owned lots. WIP that someone booked as finished. Off-site warehouses the certificate forgot. The same physical discipline as a closing inventory count, but for collateral rather than a peg.
BLS May 2025 welder median pay of $53,750 does not appear on the exam workpapers (Source: BLS). Labor cost is not eligibility.
What a clean exam looks like
Reconciled subledgers. Locations that match the certificate. Serials on high-value iron if M&E is in the base. A controller who can pull the same report twice. Federal Reserve 76.0% utilization is a national capacity print, not a substitute for that reconciliation (Source: Federal Reserve G.17).
Census CBP 2023’s 68.4% under-20 share is why many first exams fail on “we keep that in the other building” (Source: Census CBP). Small shops still need location lists.
| Exam finding | Typical result |
|---|---|
| Ineligible AR in the base | Availability cut |
| Customer-owned inventory counted | Reserve or exclusion |
| Undisclosed third location | Extra exam / holdback |
| Clean recon, known sites | Standard cycle |
Who pays, and who argues?
The credit agreement says. Often the borrower. Jason Taken is a business broker and does not perform field exams. Educational information only. The examiner and the lender own the certificate.
How to prepare a shop for the first exam
Reconcile AR to the general ledger the week before, not the morning of. Pull aging, invoice images, and credit memos for the examiner’s sample. Walk the inventory locations with a map: raw, WIP, finished, holds, customer-owned, consigned. Put yellow tags on anything that is not yours to pledge. If you have a third-party warehouse, have the bailee letter ready.
Tell the second-shift lead that strangers with clipboards are allowed. A defensive floor is how counts go wrong. The examiner is not OSHA and not a customer. They are testing the certificate.
WIP is the usual fight. A job that is 40% complete is not finished goods. A job waiting on a customer-owned fixture is not always eligible. Inventory and WIP is the analytical sibling. The exam is the collateral sibling.
After the report, fix the certificate. Do not argue that last month’s availability was “close enough.” Availability that was overstated is a trust problem with the lender you still need. The glossary only names the visit. Asset-based lending names the box.
BizBuySell’s 223-day manufacturing median close is not an exam cycle (Source: BizBuySell). Underwrite exams happen on the lender’s clock, often inside the exclusive.
Isolation
The glossary keeps field exam off the QoE H1. The FAQ holds the question. When an ABL path is real, book a confidential intro call.
After the visit: change the certificate, not the examiner’s tone
If the examiner excluded a location, add the location or drop it from the certificate. If they haircut WIP, stop calling WIP eligible. Arguing that a prior bank was “nicer” is not a rebuttal. Fix the system. Then invite the next cycle.
Bill-and-hold is a separate trap. If you billed a customer who asked you to hold the parts, the examiner will want the paper that makes that AR eligible. A handshake is not that paper. A CIM should not treat “ABL available” as a borrowing-base forecast. Bring last month’s certificate, a location map, and a list of customer-owned lots. Those three items predict the first visit’s mood. This definition names the visit, not the revolver product. Asset-based lending remains the credit-box briefing. After the visit noun is straight, a confidential intro call is the conversion path.
What a field exam is not
It is not a quality of earnings. Examiners do not recast EBITDA. It is not OSHA. It is not a customer tour. It is not the borrowing-base product itself. The visit tests whether last month’s certificate matches the floor — locations, WIP, customer-owned lots, and invoices that never shipped. BLS May 2025 welder median pay of $53,750 does not appear on the workpapers (Source: BLS).
How it shows up: rarely in a CIM, and it should not. A CIM that forecasts availability as if the first exam had already passed is writing fiction. Prepare the shop: reconcile AR the week before, walk locations with a map, yellow-tag anything that is not yours to pledge, and have the bailee letter ready for a third-party warehouse. WIP is the usual fight. A job that is 40% complete is not finished goods. Inventory and WIP is the analytical companion. The exam is the collateral companion. BizBuySell’s 223-day manufacturing median close is not an exam cycle (Source: BizBuySell).