🏦 Asset-Based Lending (ABL): Lessons from the Controller’s Chair
“ABL can save your cash flow — or break your reporting if you’re not prepared.”
I still remember my first ABL field exam like it was yesterday.
The company thought they were prepared. Their AR aging looked clean. Inventory numbers matched the ERP. Borrowing base certificates were filed on time.
Then the lenders arrived… and everything changed.
🧭 Lesson 1: The Borrowing Base Tells the Real Story
ABL isn’t about what’s on your balance sheet — it’s about what your lender believes is collectible and real.
AR with aging issues gets cut.
Inventory with weak backup gets discounted.
Any timing mismatch between ERP and subledgers creates instant questions.
📌 Controller Tip: Reconcile AR and Inventory daily once an ABL loan is in place. Lenders test — they don’t trust.
🧾 Lesson 2: Lock the System Before Submitting Certificates
One of the most painful lessons I learned? A $200 entry posted after the borrowing base was submitted triggered a cascade of recalculations during field audit.
📌 Controller Tip: Close or lock accounting periods before sending borrowing base or ABL reports to your lender. Even the smallest adjustments can create unnecessary scrutiny.
🧮 Lesson 3: Keep Audit-Ready Schedules Year-Round
ABL lenders think like auditors. If your schedules are sloppy, they’ll assume your controls are weak. If your reporting is tight, they trust faster and approve more easily.
Maintain supporting files for every borrowing base number.
Use consistent folder naming and version control.
Keep historical borrowing base submissions in one CFO Drive or Audit Drive.
📌 Controller Tip: Build ABL support structure early. Don’t wait for the field exam to get organized.
🗂️ Lesson 4: The CFO Drive — Your Secret Weapon
In ABL lending, chaos is your enemy. Too many companies bury critical files inside 1,000+ accounting folders — especially if there’s high turnover and poor documentation.
A CFO Drive is a dedicated, restricted-access folder system used to store:
Borrowing base support and schedules
Field audit workpapers
Financial statements and reconciliations
Legal and HR compliance documents tied to the loan
This single source of truth protects the company when team members change — and ensures critical information isn’t lost in the shuffle.
👉 And if turnover is happening every six months, that’s a red flag. Review your retention strategy, talk to your employees, and understand the real story behind the churn. Poor structure is often a symptom of bigger cultural or operational problems.
📉 Lesson 5: Inventory Is Always the Weakest Link
Inventory lending is tricky. Obsolete, in-transit, or unverified inventory often gets disqualified. Even clean reports can collapse under field testing if documentation is weak.
📌 Controller Tip: Reconcile physical inventory to the general ledger monthly — not just at year-end. Clean perpetual inventory records are your strongest defense.
🧠 Lesson 6: Field Exams Are Not a One-Time Event
Many companies treat the first field exam like a big hurdle and then relax. Big mistake. Lenders can come back quarterly or even monthly. The more disciplined your reporting, the smoother these exams get over time.
✨ Final Thoughts
ABL financing can be a powerful liquidity tool — but it demands tight accounting discipline, structure, and transparency.
Companies that integrate borrowing base reporting into month-end close, maintain a CFO Drive, and foster accountability avoid lender headaches, gain trust, and keep their financial house in order.
When structure and people align, ABL isn’t a burden — it’s a competitive advantage.
📌 Services & Disclaimer
Acrux Advisory is not a CPA firm and does not provide services requiring a public accountancy license. All services are focused on accounting operations, financial reporting, and controller-level support. We do not provide audit, attest, or tax services that require licensure. Availability may vary, and engagements are accepted based on current capacity.