Field Warehousing

Custody Separation

Physical barriers and signs designate the area under the control of the independent warehouse company. This field warehousing setup allows the lender to have the same security as a public warehouse while the borrower avoids the cost of moving goods offsite. The capability to secure the inventory in situ is measured by the custodian’s daily presence and logbooks.

A production yield can be immediately pledged as collateral the moment it enters the fenced area.

Inventory Release

Movement of goods out of the secured zone requires a formal release from the lender or the payment of a corresponding portion of the loan. This process ensures that the value of the remaining collateral always stays above the required threshold. The audit that measures the effectiveness of this system is the unannounced site visit by the lender’s agent.

Calling for a release before the funds are cleared can create a shortfall in the security.

Liability Buffer

Custodians are responsible for the physical count and the condition of the goods while under their lock and key. This independent verification provides the lender with a higher level of comfort than a borrower’s self reported figures. The demonstrated rate of accuracy in these facilities is typically very high due to the strict access controls.