Warehouse receipt based financing is a kind of inventory financing, wherein loans are given to manufacturers and processors (borrower), by way of pledge of warehouse receipt i.e. against commodities held as collateral. The borrower (eg: farmer) deposits a certain amount of goods into a warehouse deposit and regulatory authority (WDRA) accredited warehouse in exchange for a warehouse receipt which has all the necessary details like quality and quantity of the produce. The warehouse receipt can then be transferred to a bank, which provides a loan equivalent to a certain percentage, generally up to 70-75 per cent of the value of the collateral with the warehouse. At maturity, the borrower sells the commodity to a buyer who then either pays the bank directly or pays the borrower who then repays the bank. On receipt of the funds or an acceptable payment instrument, the bank surrenders the warehouse receipt to either the buyer or the seller (depending on the specifics of the transaction), who then submits the warehouse receipt to the warehouse, which releases the commodity. In case of default on the loan, the bank can use the warehouse receipts in its possession to take delivery of and sell the …show more content…
NWR, defined in Section 2(m), means a warehouse receipt under which the goods represented therein are deliverable to the depositor or order, the endorsement of which has the effect of transfer of goods represented thereby and the endorsee for which takes a good title and a non- NWR is defined as a warehouse receipt other than a negotiable warehouse receipt. Accordingly, warehouse receipts may be transferable by simple endorsement/ signature. NWRs are transferred by endorsement and delivery i.e., the original depositor or the holder in due course (transferee) can claim the commodities from the warehouse. NWRs can be traded, sold, swapped and used as collateral to support borrowing
First, when a creditor (ICE) extends credit to a debtor (Top Quality) and takes a security interest in some property of the debtor, Top Qualities inventory in this case, it is called a secured transaction. The inventory is then considered collateral for the financing that ICE provided for Top Quality, which was made clear in the financing statement that ICE filed. Any secured transactions where personal property is used as collateral is governed by Article 9 of the Uniform Commercial Code. The UCC was revised in 2001 to better adhere to modern times, and since this case took place from 2007 to 2009, we will be applying the revised edition. There are many sections of Article 9 that should be considered when examining this case. First, the filing of a financing statement, form UCC-1 in Article 9, should be confirmed as filed with the appropriate state office. Once this has been done, confirming the attachment of Top Quality’s inventory to ICE, we can then look to confirm that the initial sale to Chrisman was paid in full to Top Quality, which it was. If this were not the case, ICE would be entitled to the remaining sale proceeds. Now we move on to the requirements of a buyer in the ordinary course of business, per Article 9 of the UCC. According the textbook, “A buyer in the ordinary course of business who purchases goods from a merchant takes the goods free of any perfected or unperfected security interest in the merchant’s inventory, even if the buyer knows of the existence of the security interest” (Cheeseman). The textbook then continues to explain that this rule is necessary because buyers would be reluctant to purchase goods if the merchant creditors could recover the goods if the merchant defaulted on the loans owed to secured creditors. These statements come from the Revised Article 9, section 320(a). This is based on the idea that the buyer purchases in good faith, meaning that they are
Prior to Fuller’s transfer, management at the Carson’s location was poorly run using the classical approach. While this approach can be successful, management has to find a good middle ground between caring for the company and caring about their employees. A traditional classical approach recognizes that there are five important factors to running a successful business (Miller, 19). According to text, these factors are planning, organizing, command, coordination and control (Miller, 19-20). These factors can be seen when you look at Third Bank as a whole. In the study, the CEO saw the issues in his company and put a plan together to improve. He had meetings with management, like fuller, to organize a solution. He then commanded all locations
We will also be tracking down direct verification of inventory that is held by public warehouses or outside keepers. Auditors will think through Costco’s actions for assessing warehouse’s performance, internal auditor’s report on warehouse’s internal control, and reconcile Costco’s record of inventory to warehouse’s statement. We will also account for any crack in receiving and shipping records. Auditors will test for appropriate authorization for inventory purchase, obtain purchase journals linked to vendor’s accounts, receiving reports and purchase orders. We will also review right of entry to accounting system linked to inventory to decide relevance of system access, review relevance of inventory write-offs and track the moving of inventory from one warehouse to receiving of the other warehouse.
Costco Wholesale Corporation was an uncommon type of retailers called wholesale clubs. These clubs differentiated themselves from other retailer by requiring annual membership purchase. Especially in case of Costco, their target market is wealthier clientele of small business owners and middle class shoppers. They are now known as a low cost or discount retailer where they sell products in bulk with limited brands and their own brand. The company is competing with stores like Wal-Mart, SAM’s, BJ’s, and Sears. The case begins with an individual shareholder, Margarita Torres, who first purchased shares in 1997 and who is trying to evaluate the operational performance of the business in order to make a decision rather or not purchase more shares
What do you see as the pros and cons for nonprofits of engaging in large-scale earned-income ventures?
receive bank financing for this new entity of HKD 2.3bn as a Delay Draw Term Loan (“DDTL”) plus HKD
A firm’s receivables account constitutes amounts owed to the company by customers, employees, or the government (Gibson, 2011). The account typically increases as a result of normal business operations where a company offers products or services to customers on account (Gibson, 2011). A company’s days’ sales in receivables is one of two measurement tools used to evaluate a firm’s trade receivables liquidity (Gibson, 2011). It is considered to be a gauge of a company’s ability to collect funds in relation to the credit terms it offers its customers (Bujaki & Durocher, 2012; Gibson, 2011). Essentially it calculates the average age of a company’s receivables account at the end of the year (Bujaki & Durocher, 2012; Gibson, 2011).
The receivables turnover is based on the assumption that all sales are credit sales. The values of receivables turnover for 2004 and 2005 are 10.21 times and 8.83 times, respectively. This means that IQ’s efficiency is considerably declining in terms of cash collection. The decrease in receivables turnover is explained by the higher increase in average net receivables (71%) than the increase in net credit sales (25%).
The METRO Cash & Carry (MCC) company was established in 1964. In that year, the first full scale METRO Cash & Carry wholesale store opened in Mülheim an der Ruhr with selling space of 14,000 square metres. That was a new dimension in food and non-food wholesale. The MCC company was founded by the two brothers Wilhelm Schmidt-Ruthenbeck and Erwin Schmidt as well as the Schell family, owner of a wholesale company for electrical appliances. Soon, Otto Beisheim was nominated as the managing director of METRO-SB-Großmärkte GmbH & Co. KG.
status of freight charges (prepaid or collect), and date of shipment. The letter of credit requires very sensitive expiration dates as well. Consequently, Logan needs to be very disciplined with his cash flow liquidity and to always be aware of possible supply bottlenecks. If these requirements are not met, the importer does not have to pay Logan. Furthermore, the documentation
The organization’s goal is to improve 10% of productivity. To achieve its goal the organization has implemented a custom-built warehouse management system (WMS), which has had an enormous impact on productivity. But in order to ensure that the system effectively supports warehouse operations, Tony has analyze the systems by checking were to be delivered by this system, rate of the system being out of order and impacting on the packing of orders, the duration to train new staff members to use the system, and the how do customer’s orders process sufficiently assisted. Tony has also documented the process form order receipt to dispatch) to assist with his analysis, and to help him to understand the exact process followed in packing an order. He has completed SOWT analysis and reviewed on staffs’ performances, KRAs and KPIS to measure and analyze the process of organization.
It usually implies that the debtor has received something from the creditor, in return for which the debtor has promised to make repayment at a later time. The relationship between a debtor and creditor can be positive if everyone follows the terms that were agreed upon at the onset of the contract, but it does not take too much of sentiment to turn negative if one party fails to hold up the bargain. The debtor-creditor relationship can be made up by many different individuals, business and parties that make the financial system operate. For example, the relationship between retailer and supplier. While it is the function of a retail outlet to sell merchandise to customers, business activity would not be possible without a supplier to provide the inventory. New retail and supplier relationships are developed everyday as product developers seek to obtain the greatest distribution possible. Upon delivery, a retailer may sign a contract for new merchandise and the supplier will likely mail a bill to the business at a later date. Debtors and creditors in a retail situation may agree to some incentives, such as discount pricing in exchange for placing orders of a certain size. This illustrated the debtor-creditor relationship between a retailer and
One of the limitations of this study is limitation of data and sources. The information and sources for the world class warehouse performance is not many and only short description only. Because the issue of world class warehouse is still new and not much can make comparison between that. For the journal and article that related to world class warehouse
Inventory financing: Dinner Bell can use this as they have expensive equipment with them and medium length sales cycle. In this the lender will use their equipment as collateral and the loan is paid as sales are made to the customers. Dinner Bell can use many things as collateral such as; tennis courts nine Golf-hole course,
Fill the utilitarian need of giving transportation and assurance to stock purchased in retail foundations of numerous types.