Applied Business

Methods
Dr. Katalin Csek
11th Lecture

Lombard Crediting
Inventory financing based on negotiation of
the warehouse warrant (+) receipt;
The functions of warehousing:
Storage of goods;
Protection of goods;
Risk bearing;
Financing;
Processing;
Grading

and Branding;
Transportation;

Actors
Warehouses:

private, field, public, customs or

bonded= are bailees;
Owners of the goods (mainly agricultural
commodity: stowed crops;=bailors
Documents:
1st: inventory ledger=bailees official record;
2nd: negotiable or non-negotiable receipt of
the crops=bailors document for sale;
3rd:negotiable paper=document of title that is
evidencing the stowed commodity= bailors
document for obtaining loan;

Values
The

value at the time of depositing the

goods=issuing the papers= limitation of the
bailees responsibility towards the holder or
holder in due course of the negotiable paper;
The value of the loan given against the
warehouse warrant by the bank which takes
the 3rd paper in custody;
The value that the buyer of the bailor pays
for the 2nd paper=warehouse receipt, as an
evidence of the existence and storage of the
goods=market value;

Legal Guarantees
The

warehouse can release the commodity

against the joint presence of the warrant and
receipt to the holder in due course=to a person
that is specified by the paper by his name;
The bank is entitled to enforce execution sale in
case of non-payment of the loan: the warehouse
open a public auction; the outstanding amount
(sale price (loan+interest+charges of auction))
will be preserved to the holder in due course;
In case of loss or damage the warehouse must
pay up to the value stated at the time of
depositing;

Factoring 1.
Method

of financing =with recourse;

Security tool=without recourse;
Protection tool against risk of fluctuation
exchange rate=both types;
Financial accounting services=both type;
Legal service=both types;
Actors:
Supplier=assign the accounts receivable
against the purchaser= assignor=receiver of
80-90% of the buyers debt in advance;
Export-factor house= 1st assignee;

Factoring 2.
Export

credit insurance company=commercial

risks will be insured;
Factor-house located in the country of the buyer=
2nd assignee ;

The

buyer=debtor;
Costs are dependent on:
Quality of the debtor;
Geographical sector;
Number or invoices;
Number of clients;
Interest rate on average;