Don’t take receivables at face value
Abstract: Borrowers often use accounts receivable as collateral for their loans. But it’s important to ensure that a borrower’s receivables are truly collectible amounts. This article suggests some warning signs that may indicate accounts receivable weaknesses — or even fraud. It points out that it’s a good idea for a lender to engage a professional with accounting expertise to support due diligence by performing financial statement audits and other procedures to verify the numbers.