Field notes
What lenders ask about internal controls that boards often overlook
Credit committees increasingly ask how inventory counts and related-party transactions are governed — not only how EBITDA looks.
When a mid-sized manufacturer refinances, the information pack rarely stops at historical financials. Lenders want to know who authorizes inventory write-downs, how often cycle counts cover high-value SKUs, and whether related-party sales follow the same credit checks as third-party customers.
Boards that only review variance charts miss these questions until the term sheet negotiation. A short internal control review focused on inventory and treasury cycles gives directors language they can use in credit discussions without waiting for the statutory auditor’s management letter.
Keep evidence packs ordinary: signed count sheets, bank reconciliation binders, and approval trails for large journals. Fancy dashboards impress less than a clear file an outsider can follow in an afternoon.