Editing Inventory (section)

==Inventory credit==
Inventory credit refers to the use of stock, or inventory, as [[collateral (finance)|collateral]] to raise finance. Where banks may be reluctant to accept traditional collateral, for example in [[developing countries]] where [[land registration|land title]] may be lacking, inventory credit is a potentially important way of overcoming financing constraints.<ref>{{cite web|title=Inventory Financing|url=https://www.targray.com/trade-finance/inventory-financing|publisher=Targray|access-date=27 August 2020}}</ref> This is not a new concept; archaeological evidence suggests that it was practiced in Ancient Rome. Obtaining finance against stocks of a wide range of products held in a [[bonded warehouse]] is common in much of the world. It is, for example, used with Parmesan cheese in Italy.<ref>{{cite web|url=http://www.italiannotebook.com/local-interest/parmigiano-hedge/|title=Who moved my Parmigiano?|work=italiannotebook.com|url-status=live|archive-url=https://archive.today/20130126133935/http://www.italiannotebook.com/local-interest/parmigiano-hedge/|archive-date=2013-01-26}}</ref> Inventory credit on the basis of stored agricultural produce is widely used in Latin American countries and in some Asian countries.<ref>{{cite web|first1=Jonathan|last1=Coulter|first2=Andrew W.|last2=Shepherd|url=http://www.fao.org/docrep/v7470e/v7470e00.htm|title=Inventory Credit – An approach to developing agricultural markets|website=fao.org|location=Rome|year=1995|url-status=live|archive-url=https://web.archive.org/web/20090314040802/http://www.fao.org/DOCREP/V7470E/V7470E00.HTM|archive-date=2009-03-14}}</ref> A precondition for such credit is that banks must be confident that the stored product will be available if they need to call on the collateral; this implies the existence of a reliable network of certified warehouses.<ref>{{cite web|last=CTA and EAGC|title=Structured grain trading systems in Africa|url=http://publications.cta.int/media/publications/downloads/1749_PDF.pdf|publisher=CTA|access-date=27 February 2014|url-status=live|archive-url=https://web.archive.org/web/20141002180749/http://publications.cta.int/media/publications/downloads/1749_PDF.pdf|archive-date=2 October 2014}}</ref> Banks also face problems in valuing the inventory. The possibility of sudden falls in commodity prices means that they are usually reluctant to lend more than about 60% of the value of the inventory at the time of the loan.