Published on May 2, 2023
Allen Wine Group is pleased to offer winery collateral audits as a service for our banking partners, to evaluate and measure the asset collateral and risk for winery for winery loans.
Our years of wine industry experience are a proven and invaluable asset when it comes to understanding the complexities associated with lending. With our expertise, we can deliver detailed and insightful analysis of a winery’s collateral value before loan extensions or other financing options are authorized. We understand collateral risks in asset-based lending and recognize that lenders need to know wineries have sufficient collateral to cover outstanding borrowings.
The purpose of this article is to cover the basics of winery collateral audits and to highlight the expertise of our accounting services firm as it relates to this needed service in an industry that is thriving in both product and profit growth.
A winery collateral audit provides a comprehensive evaluation of the winery’s assets and value, which helps lenders determine the loan amount they can safely provide to the business. This audit primarily tests the accounts receivable and inventory, but also includes an assessment of overall business processes such as sales cut-off and discounts accounting.
By conducting a thorough collateral audit, lenders can gain insight into the winery’s overall financial health, which informs their decision-making regarding financing. Ultimately, the collateral audit is a critical tool that assists lenders in managing their risk and ensuring that loans are appropriately secured.
When it comes to working with the Allen Wine Group, the advantages are clear. Our team of professionals has extensive accounting experience at the highest level of the industry, with experience working at wineries in Napa and Sonoma, as well as serving as auditors at prestigious CPA firms like Deloitte, and Moss Adams and Dal Poggetto.
This wealth of knowledge provides valuable insights to clients and understand the intricacies of the industry. We regularly prepare borrowing base certificates for clients, giving them a thorough understanding of how they work and what they measure.
Managing risk is an essential component of any successful business, and taking an efficient and effective risk-based approach to collateral audits is a key tool in ensuring that potential hazards are identified and addressed before they can become serious problems.
One critical element of this process is paying close attention to the details of borrowing base certifications, particularly when it comes to the net FOB value of assets. Too often, these certifications fail to take into account discounts or depletion allowances, leaving them vulnerable to potential shortfalls.
Similarly, it is vital to establish precise shipment cut-off points to ensure that all sales are recorded accurately, and revenue is never recognized prematurely.
Finally, careful tracking and management of DTC inventories are essential to mitigating risk and preventing inventory-related complications from disrupting operations. Whether managing physical counts or futures, it is crucial to take a careful and comprehensive approach to collateral audits to protect the long-term viability and success of any business.
At Allen Wine Group, we are proud to provide comprehensive audits that can help wineries secure more favorable loan terms and protect their assets and our thorough and accurate audit process provides our banking partners with the confidence they need to make wise decisions when assessing winery loans.
Our service team members have over 250 collective years of industry experience and can identify winery specific uncertainty efficiently and effectively. Our collateral examinations include recurring field observations, and collateral monitoring or valuation such as physical counts, discounts and depletion consideration, and proper cut-off of receivables and shipments.
If you would like to schedule a consultation to discuss the audit process with our team, please contact Tim Allen at Allen Wine Group.