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Finished Goods
Last Updated: Jun 7, 2019
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A type of inventory consisting of goods that are ready for sale by a borrower to its customers. These goods can range from components ready for assembly into other products (hard drives, brake pads), to complete products ready for sale to end customers (laptops, construction equipment).
Finished Goods typically have the highest advance rates among the different types of inventory in a borrowing base because they are usually the most easily disposed of during liquidation by selling them through the borrower’s existing sales channels. The implication is that certain products are considered finished goods for their manufacturer or distributor, but not for their end customer. For example, brake pads would be considered finished goods for a brake pad manufacturer, and an auto parts distributor, but not for a construction equipment manufacturer.