Intro to ABL Seminar Outline

1. Rationale for an Asset Based Loan (“ABL”)

2. ABL, a Brief Historical Overview

3. Understanding the cash conversion cycle and its role in ABL

4. Establishing an ABL area

5. Understanding the business and the associated risks on collateral

6. The economics of ABL

7. Dominion of cash issues

8. Accounts receivable as collateral

• Aging Analysis
• How are Receivables aged?
• Invoice date vs. due date (impact on eligibility parameters)
• Aging codes, what they mean (impact on eligibility)
• Detail aging vs. summary agings
• Spread analysis, analyzing the current aging using comparables.
• Matching turnover, using Receivable statistics compared to spread movement
• Credit extension and collection procedures
• Analyzing Receivable concentration and understanding the customer base.
• Analyzing delinquent accounts
• Ineligibility issues (what, how much and why)
• Test of authenticity (shipping, verifications, credit memos, subsequent payments)
• What is Dilution?
• Advance rates consideration
• Other issues (cash control mechanisms, reporting considerations, etc.

9. Inventory as collateral

• Initial lending considerations
• Condition and existence questions
  
  • Aging of inventory
  • Purchase vs. sales
  • Historical CPA book to physical adjustments
  • Treatment of returns
  • Handling of slow and obsolete inventory
  • Calculating turnover the ABL way
• Tour of the Facility
• Recordkeeping systems
• Classification of Inventory
  
  • Raw Materials/ Work In Progress/ Finished Goods
  • In – Transits
• Tests of Authenticity
• Ineligible Inventory
• Insurance
• Advance rate consideration

10. Reporting metholodies

11. Case studies