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Chapter 3: 11DQ (page 247)

Briefly discuss three types of lender control used in inventory financing.

Short Answer

Expert verified

The three types of lender controls are blanket inventory, trust receipt and warehousing.

Step by step solution

01

Blanket inventory

The blanket inventory is a loan that provides the lender a lien against the borrower’s inventory.

02

Trust receipt

In the trust receipt lender control, the borrower holds the inventory in the lender’s trust. In this process, every item of the inventory is marked and has a serial number. The trust receipt is cancelled when the inventory is sold.

03

Warehousing

The process of identifying, segregating, and storing the inventory in control of an independent warehouse company is called warehousing. In this process, the goods are under the control of the warehousing company.

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