Warehouse Financing

Warehouse financing is a type of financing where the loan is sanctioned to the manufactures and business owners on the basis of their inventory. This means the goods and the commodities in the inventory of the manufacturers are used as collateral for trust in order to get loan. This type of financing is also called as inventory financing. There are different locations in which the goods or commodities can be held that are being used as collateral to acquire loan. In certain cases the goods or commodities are held in the public warehouses. In some other cases the goods are held in the borrower’s warehouse however these goods are supervised and managed by some third party. There are a number of third parties and financial institutions that can be involved in warehouse financing. These financial institutions designate a collateral manager that ensures the quality and quantity of collateral goods according to the agreement and issues a receipt to the borrower declaring the quantity and quality of the goods.

There are a number of benefits of the warehouse financing to the borrower. With the help of warehouse financing a borrower can leverage the use of inventory and other raw materials are the primary collateral in addition to some extra financing that can be made by the synchronization of the stock of the borrower. Warehouse financing is a source of financing that has better options as compared to the short term working capitals and loans. The repayment schedule of the warehouse financing can be managed or coordinated with the actual usage of the inventory and raw materials.

Other Related Accounting Articles:

• Warehouse Lending
• Internal Controls of an Inventory
• Inventory with High Turnover
• Materials and Inventory Cost Control
• Materials Ledger Card–Perpetual Inventory
• Average Inventory Calculation
• Stock Control
• Inventory Accuracy
• Indirect Materials
• Just In Time Inventory