Are Receivable Appraisals More Important in Challenging Economic Times?
VION Investments has valued receivables ranging from tax credits to consumer loans. We have performed these appraisal services for some of the largest companies in the world, including US and international banks, institutional investors, finance companies, and investment banks. We also value consumer receivables in asset-backed lending (ABL) situations and work with small and medium enterprises (SME) when asset appraisals are valuable for capital raising purposes.
Recent inflation is impacting the credit quality of manufacturers and retailers. Increased labor and supply costs are making it hard for SMEs to maintain margins without increasing prices. Many companies are facing supply chain issues, including shortages of critical products, delays, and increased shipping costs. This impacts cash flow, receivable performance, and a company’s earnings, resulting in bankruptcy if not managed properly.
Managing cash flow shortfalls is easier with well-structured loans tied to a company’s assets. Lenders willing to provide credit under a borrowing base tied to accounts receivables can provide much needed working capital for businesses while inventory makes its way through the supply chain to customers, generating revenue for the business and cash flow to repay loans.
VION’s appraisal services have helped businesses access working capital lines of credit from lenders by valuing the quality of the accounts receivable being offered as collateral. In a volatile industry or in rapidly changing economic conditions (for both good and bad), it is best to get an evaluation as often as every six months. In the most volatile situations, some lenders or investors choose a mark to market approach. This type of evaluation with month-to-month appraisal are fast, efficient and limit major surprises.
Overall, asset appraisals are more important in changing economic times, rather than difficult economic times. Depending on how fast the economy is changing, an asset portfolio might experience more stress. It is important for companies, lenders, and investors to regularly evaluate receivable assets used as collateral, particularly if there is volatility in the industry or economy. A timely asset valuation allows lenders to increase lending, helping businesses grow, or protects lenders from becoming over-extended on assets that are deteriorating in performance.
VION is one of the largest consumer and commercial receivable valuation companies in the country and can provide services to ABL lenders, investors or corporate leadership to help them succeed in changing economic times. Lenders finding themselves in troubling situations can utilize VION as a master servicer to help manage tricky times from a servicing and collection perspective. VION also assists lenders and investors through acquisition of assets to pay off or pay down a borrower’s obligations.