Warehouse Receipt – Definition

Cite this article as:"Warehouse Receipt – Definition," in The Business Professor, updated May 13, 2019, last accessed December 4, 2020, https://thebusinessprofessor.com/lesson/warehouse-receipt-definition/.


Warehouse Receipt Definition

A warehouse receipt is issued to serve as a proof that certain goods or commodities are stored in an approved facility at a particular time. Approved facilities are mostly warehouses where individuals or firms store their commodities. Warehouse receipts lists the types and quality of goods store in a facility.

A warehouse receipt is a documentation that are used in future markets as a proof that certain commodities are kept by the owners within a warehouse. The receipt contains the name of the owner of a commodity, the quantity stored in a warehouse and the condition of the commodity when it was stored.

A Little More on What is a Warehouse Receipt

Warehouse receipts are records used for future markets, they are documentations used as proofs in future contracts. Warehouse receipts indicate the ownership of commodities, the quantity and quality of the commodities. This receipts are important for future delivery of stored commodities, that is, without a show of warehouse receipts, the ownership of specific commodities cannot be ascertained.

Hence, warehouse receipts are used to settle futures contracts. Vault receipt is an example of warehouse receipt but it is used for metals. Vault receipts show ownership of precious metals stored in a warehouse, bank and other approved facilities. Without the receipts, no delivery of stored commodities can be made.

Warehouse receipts are used for commodities stored which will be delivered or used later on, they are called commodities for physical delivery. Commodities for physical delivery make up a significant portion of economy’s gross domestic product in the United States. These commodities are used to produce and manufacture many goods.

Commodities for physical delivery are stored purposely for future contracts, they are used for manufacturing various types of goods. In the stock exchange market, buyers and sellers use future exchanges to protect themselves from price vulnerability of commodities. Trades made in futures exchanges are done by buyers and sellers who either sell or buy commodities for physical delivery.

Traders who engage in future exchanges are those that want to sell or buy commodities for physical delivery. There are however future contact processes that must be duly followed in this type of exchange. Tracking of physical inventory is a crucial process for future contracts. Tracking of inventory give way to other future contracts procedures that commodity producers need to follow.

Also, commodity inventory must be registered with designated authorities beefier they can be used by commodity producers. The inventory must be inspected and authenticated before they become useful in the future markets.

Another vital future contract process is warehouse receipts. This process provides the documentation that authorize the goods for sale or  transfer to a buyer.

References for Warehouse Receipt

Academic Research on Warehouse Receipt

The role of warehouse receipt systems in enhanced commodity marketing and rural livelihoods in Africa, Coulter, J., & Onumah, G. (2002). Food policy, 27(4), 319-337.

A finance company’s approach to warehouse receipt loans, Eisenstadt, M. (1966). New York Certified Public Accountant (pre-1986), 36(000009), 661.

Improving access to rural finance through regulated warehouse receipt systems in Africa, Onumah, G. (2003, June). International Trade Center, Ronald Reagan Building, Washington, DC (pp. 2-4).

Implementing warehouse receipt systems in Africa potential and challenges, Onumah, G. (2010, September). In fourth African agricultural markets program policy symposium, organized by the Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) of the Common Market for Eastern and Southern Africa (COMESA).

Trust Receipt vs. Warehouse Receipt-Which Prevails When They Cover the Same Goods, Funk, C. W. (1963). Bus. Law., 19, 627.

The use of warehouse receipt finance in agriculture in ECA countries, Höllinger, F., Rutten, L., & Kiriakov, K. (2009, June). In Technical background paper for the World Grain Forum (pp. 6-7).

Review of warehouse receipt as an instrument for financing in India, Mahanta, D. (2012). International journal of scientific & technology research, 1(9), 42-45.

The Protection of a Holder of a Warehouse Receipt, Hanna, J. (1930). Minn. L. Rev., 15, 292.

Warehouse Receipt Finance for Farmers–A Glimpse, Mor, M. N., & Fernandes, K. (2009). A Publication By Mcx And Price Waterhouse Coopers/Commodity Ġnsight Yearbook.

The Research of Risk Management Basis of Warehouse Receipt Pledging [J], Xiaoyan, Y. J. C. Y. R. (2008). China Market, 2, 005.

The Warehouse Receipt-Credit Security and Financing Device, Everberg, C. B. (1949). Com. LJ, 54, 51.


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