Definition
Confirmed Warehouse is an intermediary service where the producer, dealer, and bank form tri-party deal; in the deal, the carrier is bank credit and the settlement tool is bank acceptance with combination of logistics and cashflow.
Functions and Features
The dealer pays security deposit to the bank as per stipulated ratio of the deal amount according to the purchase contract signed with the supplier. The dealer applies for bank acceptance designated for trade payment to the supplier. The suppler ships the goods to the dealer according to Delivery Advice issued by the bank. The shipped value for each batch is within the amount of security deposit paid by dealer to the bank. The bank advises the supplier that the cumulative shipment value shall be less than the balance in security deposit account. The cycle carries on till the security deposit account balance reaches or exceeds the bank acceptance value. In case the security deposit account balance fail to reach the bank acceptance value upon expiration of the bank acceptance, the supplier pays cash to bank for the difference between face value on the dealer's expiring bank acceptance and the total amount on delivery notice issued by the bank.
For suppliers: Batch sales increase profit, reduce bank financing, reduce fund cost, ensure bill collection, and improve fund utilization.
For buyer: There is financial facility to address the funding challenges for lump sum purchase payment. There is batch purchase to reduce cost.
Applicable Clients
Confirmed Warehouse is mainly applicable to trades of large durable commodities such as home appliance, auto, construction, and machinery between the fairly frequent buyers and sellers.
Currency and Tenor
RMB is the applicable currency for settlement. The maximum tenor is 6 months.
Application Documents
See Bank Acceptance section for documents required for dealer writing the bank acceptance; see Working Capital Loan section for documents required for suppliers; the dealer and the supplier shall present documents relating to trade as required by Hua Xia Bank.
Note: This page is for reference only, part of the business to local outlets announcement with specific provisions prevail.
