Warehouse receipt financing provides loans to the purchaser based on pledging warehouse receipts for the supplier’s goods stored at a warehouse specified by the bank. The draw rights for the goods are controlled by the bank.
It aims to provide leverage for purchasers and facilitate batch sales by suppliers.
Business process
1.
The purchaser obtains a loan guaranteed by a warehouse receipt to purchase products from a specific supplier.
2.
The bank assesses the supplier's credit standing and repurchasing capability.
3.
The bank and the supplier enter the repurchasing and quality assurance agreements.
4.
The bank and warehouse supervisor enter into the warehouse supervision agreement.
5.
After receiving notice of the bank's financing approval, the supplier ships the goods to the specified warehouse and obtains the warehouse receipt.
6.
The purchaser pays a 30% acceptance deposit.
7.
The supplier pledges the warehouse receipt to the bank, and the bank issues a bank draft to the supplier with the purchaser as the drawer and supplier as the payee.
8.
The purchaser pays the deposit, and the bank refers the draw rights to the purchaser until the deposit balance equals the amount of the bank draft.
9.
When the bank draft matures and the deposit balance is insufficient, the supplier must repurchase the pledged goods under the warehouse receipt on the maturity date.
Advantages
·
Realizes batch sales of suppliers and improves operating profit.
·
Reduces financing from banks and capital cost.
·
Ensures collection of receivables and elevates fund utilization.
·
Helps purchasers obtain financing and lowers purchasing costs.
Note:
All the contents stated above are for your reference only. Please consult the local branch of China Merchants Bank for further information. China Merchants Bank reserves the ultimate right of interpretation for the contents in this page.