Remote inventory test count procedures

Cascade Credit Services has successfully verified various inventories using remote procedures as part of a collateral exam since the start of the pandemic with its associated closures and travel restrictions. The following remarks assume the Lender and Borrower/Client have approved remote procedures in concept.

Many business meetings are now conducted as participants “work from home” using meeting apps such as Zoom, GoToMeeting, WebEx, Google, MS Team and similar tools. They can be used to conduct a “test count meeting” in a warehouse or plant – or outdoors – when it is not feasible for the collateral examiner to visit the location.

A. Planning is key: Is the warehouse well-covered with Wi-Fi? If not, is 4G LTE (cell bandwidth) fairly strong? If broadband Internet (preferred) is not reliable and cell service not strong, the meeting may not be feasible.

B. Choose a virtual meeting app, and the phone/tablet/laptop available to Borrower. Cascade subscribes to GoToMeeting and Zoho Meeting. We can also join other tools if a borrower prefers. Good idea to give it a 10-minute “dry-run” in the place where the inventory sits, to help ensure Examiner and Borrower can communicate, lighting is adequate, and know how to operate the app.

C. Set the time and resources: It is likely that two on-site staffers are needed – one to hold the phone/laptop/tablet, and another to locate and actually show (count) the items selected. Both the on-site staff and Examiner should record the counts as they are made. While the time commitment varies considerably, it is not uncommon that 2-4 hours or more may be needed to reach the required scope.

D. Selections are made according to required scope. We send them shortly ahead of the scheduled time giving some consideration for pre-work efficiencies by borrower…looking up locations/bins and maybe assembling dispersed goods to help video counts go faster. Again, planning is key. Remove items from freezer: technology does not work in super-cold environments.

E. Other considerations for normal test counts still apply, for example…
1. The Examiner needs to do all normal stuff as if physically there. Ask questions. Read labels, confirm quantities in a box. Confirm pallet/unit configurations. Open some packages.
2. Reconcile variances due to receiving or shipping/production, etc., using paperwork normally accompanying inventory transactions.
3. Get an overall tour of the facility, its security measures, etc.

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