How to Set Up Warehouse Receipt Finance with a Named Collateral Manager

How to Set Up Warehouse Receipt Finance with a Named Collateral Manager

How to Set Up Warehouse Receipt Finance with a Named Collateral Manager

You want working capital against stock without selling it today. Lenders want real control of title, storage, and release. The bridge is a warehouse receipt facility with a named collateral manager and tight documents. Follow this and you will get to first draw without drama.

Outcome: a signed facility that advances against eligible inventory held under a collateral management agreement, with daily reporting, tested release mechanics, and a clean repayment waterfall.

When Warehouse Receipt Finance Fits

Use case
In-warehouse or in-tank goods at named terminals awaiting sale, transfer, or processing.
Tenor
Short cycle 30 to 180 days tied to stock turns and sales contracts.
Goods
Oil products, metals, agri, and other storable commodities with verifiable specs and liquid markets.
No-go
Unverified warehouses, uncontrolled releases, unverifiable quality, or sanctions exposure.

How the Structure Works

Piece What it does Proof or control
Warehouse receipts or tank warrants Evidence of title and quantity in storage Originals in lender or collateral manager custody
Collateral Management Agreement (CMA) Gives physical control and release rules Tri party agreement with lender rights and audit
Insurance and endorsements Covers loss, leakage, contamination, and liability Lender as loss payee, endorsements attached
Controlled collections Cash waterfall to repay draws from sales Account control agreement and assigned proceeds

Collateral Manager Standards Lenders Expect

Track record
Recognized firm with references in your product and corridor. No mystery shell operators.
Reporting
Daily stock, movements, shrinkage, and variance reports with signoff.
Control
No release without lender consent. Dual control on seals and sampling.
Audit and access
Unannounced inspection rights for lender and insurer. Clear incident escalation.

Step by Step to First Draw

Stage What happens Tips that speed approval
1) Intake KYC, goods list, specs, storage sites, warehouse contracts, and sales pipeline Pre name collateral manager and warehouse before credit review
2) Term sheet Advance rates, eligibility, price haircuts, tenor, covenants, and reporting cadence Keep eligibility simple and objective to avoid weekly fights
3) Underwriting Risk memo, valuation method, shrinkage assumptions, legal checks on title and liens Provide lien searches and any landlord waivers upfront
4) Documents Facility, CMA, account control, insurance endorsements, inspection and sampling SOPs Run a dry release test with all parties before go live
5) First draw Receipts lodged, reports issued, borrowing base calculated, funds released Lock reporting times and point people on both sides

Borrowing Base Essentials

Element Typical approach
Eligible stock Named SKUs or grades, in named sites, under CMA control only
Valuation Market index less haircut or recent transaction price, whichever is lower
Advance rate 50 to 85 percent based on product liquidity and control strength
Concentration caps Per product, site, and buyer to avoid single point risk
Clean downs Periodic full paydowns or inventory turns to prove cycle health

Fees and Cost Buckets

Bucket Who pays Notes
Interest or margin Borrower On drawn amount, tied to risk and tenor
Arrangement and underwriting Borrower Covers diligence, modeling, legal review
Collateral manager Borrower Daily control, reporting, audit support
Inspection and lab Borrower Sampling, quality certs, shrinkage tests
Insurance and endorsements Borrower Cargo, storage, liability, loss payee
Warehouse or terminal charges Borrower Storage, handling, and release fees

Common Pitfalls That Kill WR Deals

  • Warehouse or terminal will not grant lender control or audit rights
  • Collateral manager lacks scale or the insurer refuses to endorse policies
  • Eligibility rules so complex that half your stock is ineligible every week
  • Valuation method not tied to a transparent market index or recent trades
  • Release process untested until a vessel arrives and everything jams
Attention. Idle stock burns cash and storage fees.
Desire. Turn inventory into draw capacity with tight control and quick releases.
Action. Send storage sites, product list, sales pipeline, and preferred collateral manager. We will return advance rates, eligibility, docs, and a go live plan.

How We Get WR Facilities Approved

Lender route
Trade banks and private credit desks that fund your product and corridor.
CMA and site pack
Negotiated CMA, terminal terms, release SOPs, and audit rights ready to sign.
Borrowing base model
Eligibility, haircuts, and clean down logic tied to real turns and prices.
Execution control
We run the dry tests, lock reporting cadence, and track first draws against dates.

Deliverables

  • Named lender and collateral manager shortlists with timing
  • Draft CMA, account control, and insurance endorsements
  • Borrowing base and eligibility schedule with concentration caps
  • Release SOP and dry run checklist with contact matrix
  • Closing checklist from engagement to first draw

Ready to Finance Stock in Warehouse

Share storage locations, products, expected turns, and buyer list. We will bring back advance rates, lender options, a CMA draft, fee elements, and a timeline to first draw.

Start the Process

This page is informational. Any facility is subject to lender due diligence, independent credit approval, KYC and AML checks, sanctions review, and executed documentation. Advance rates and pricing depend on goods, site controls, insurance quality, and market conditions.

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