10 Oct Efficient Inventory Appraisals: Time-Saving Strategies
(3 – 5 minute read)
When an inventory appraisal is required, the goal is to have it completed as quickly and painlessly as possible, without compromising quality. Inventory appraisal timing depends on a number of factors for lenders and working with experienced professionals that have perfected a streamlined process can save you a significant amount of time.
However, it is crucial to know that you, as the lender, can play a key role in how fast your inventory appraisals are completed. Read on to learn what you can do to keep the process moving and set yourself up for speedy results!
1. Start early: Even though it can be difficult to collect documentation such as an inventory list and records, it’s imperative to work with your clients to start collecting these documents as soon as possible, and to share that information upfront with your appraiser.
During the appraisal process, the appraiser will ask for, or about:
- Most up to date inventory lists
- Inventory tracking method (software, by hand, etc.)
- How often this is tracked
- Age of the inventory
Having this information available during the engagement process will reduce the total time it takes to engage the appraisal.
2. Determine the reason for an appraisal: Explaining the reasons for getting an appraisal helps to facilitate the process, ensure that good communication is practiced with all necessary parties, and that the proper documentation is requested and provided in a timely fashion.
Reasons for an appraisal might include:
- SBA 7(a) or 504 Financing
- USDA Financing
- Default or Liquidation
- Buy/Sell Agreements
- Partnership Dissolutions
Understanding the reason behind the appraisal helps the appraiser select the appropriate valuation method, take into account relevant factors, and provide a valuation that aligns with the client’s specific objectives and the context in which the appraisal will be used. For example, if a company is undergoing bankruptcy proceedings, and an inventory appraisal is required for liquidation purposes, the scope may involve a rapid assessment of inventory to determine its estimated value under distressed market conditions. These types of appraisals will consider factors like time constraints to sell and the cost of sale.
3. Know if you need a site visit: Will your bank or government regulations require a site visit for an inventory appraisal? If you do need a site visit, you will want to factor the site visit into your timeline.
A delayed inventory appraisal can have a cascading effect on the overall lending process, and potentially a business valuation. Whether you are processing a new loan or going through the unfortunate liquidation process, it is imperative that you, as the lender, have the most current inventory list that needs to be appraised as well as an appraisal company you can rely on to assist you through the process and help meet your deadlines.
Feel free to contact our machinery & equipment appraisal team at 908-888-6030 with any specific questions you may have about the site visit and desktop appraisals we provide.