Field exam (collateral audit)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

A field exam is a review of a borrower's records and systems, carried out at its premises by the lender's own examiners or a firm it appoints, that tests whether the collateral behind an asset-based facility is what the borrowing base certificates say. Examiners trace a sample of invoices to orders, delivery records and cash received, reconcile the debtor ledger and stock records to the accounts, and measure dilution and ageing. It is not a statutory audit: it reads the collateral, not the accounts as a whole. Lenders usually run one before the facility starts and periodically after, more often once availability tightens.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.