Warehouse Financing

AAA

DEFINITION of 'Warehouse Financing'

A form of inventory financing in which loans are made to manufacturers and processors on the basis of goods or commodities held in trust as collateral for the loans. The goods may be held in public warehouses approved by the lender, or may be held in field warehouses located in the borrower's facilities but controlled by an independent third party. A financial institution engaged in warehouse financing will usually designate a collateral manager who issues a warehouse receipt to the borrower that certifies the quantity and quality of the stored goods or commodities.

INVESTOPEDIA EXPLAINS 'Warehouse Financing'

Warehouse financing offers a number of benefits to the borrower. It leverages the use of raw material as the primary collateral, while additional financing can be synchronized with the build-up of the stock. Warehouse financing also enables borrowers to obtain financing on more favorable terms than short-term working capital or loans, while the repayment schedule can be coordinated with the actual usage of raw material.

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Warehouse-To-Warehouse Clause

    A clause in an insurance policy that provides for coverage of ...
  3. Warehouse Bond

    A type of financial protection that assures an individual or ...
  4. Warehouser's Liability Form

    A document that describes the obligations of a storage facility ...
  5. Warehouse Receipt

    A receipt used in futures markets to guarantee the quantity and ...
  6. Carrying Cost Of Inventory

    This is the cost a business incurs over a certain period of time, ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  2. Investing Basics

    The Working Capital Position

    Learn how to correctly analyze a company's liquidity and beat the average investor.
  3. Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

    Learn how and why investors are using cash flow-based analysis to make judgments about company performance.
  4. Chart Advisor

    Commodity Traders Are Using Momentum To Profit From These Stocks

    Active traders are drawn to momentum strategies. These momentum winners of 2015 are worth a trader's second look.
  5. Economics

    This Is A Small Country With Huge Potential to Grow

    Trinidad and Tobago's increased revenue and economic success have been primarily generated by its energy sector, but it still might be best to diversify.
  6. Economics

    Canadian Dollar Continues To Drop, But Why?

    The Canadian dollar-US dollar exchange rate is positively related to oil prices partly due to crude oil's big share of Canada's total FX currency earnings.
  7. Chart Advisor

    Falling Copper Prices Will Drag These 2 Stocks Lower

    With copper trading near six year lows, many traders are starting to wonder whether the bottom and whether a reversal could be in the cards over the coming months.
  8. Investing Basics

    Why Is China Stockpiling Millions of Barrels of OIl?

    Can China’s recent attempts to build a big oil inventory (at current low oil prices) have a positive impact on its economy? Here’s a closer look.
  9. Chart Advisor

    Now Is The Time To Trade Industrial Metals

    Traders are turning their attention to large-cap industrial metals companies because a rebound in the global markets will likely send share prices of the underlying metals higher.
  10. Economics

    Oil Prices' Impact On Oil Transport Sector

    Short-term changes in oil prices and in the volume of oil produced have a marginal impact on the oil transportation industry in Canada.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center