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Inventory Financing Agreement for Indonesia

Inventory Financing Agreement Template for Indonesia

An Inventory Financing Agreement under Indonesian law is a specialized financing document that establishes a secured lending arrangement where inventory serves as collateral. The agreement complies with Indonesian Civil Code requirements and incorporates specific provisions required by Law No. 42 of 1999 on Fiduciary Security. It details the terms of the financing facility, including drawdown mechanics, repayment terms, security arrangements, and inventory management requirements. The document includes specific provisions for fiduciary security registration, which is mandatory under Indonesian law, and addresses local regulatory requirements for secured lending and inventory management.

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What is a Inventory Financing Agreement?

The Inventory Financing Agreement is essential for businesses in Indonesia seeking to leverage their inventory for working capital financing. This document is particularly relevant when companies need to optimize their working capital by using their inventory as collateral while maintaining operational control over the assets. The agreement must comply with Indonesian legal requirements, particularly the Civil Code and Law No. 42 of 1999 on Fiduciary Security, which governs secured transactions. The document includes comprehensive provisions for inventory valuation, monitoring, and reporting, along with specific security creation and perfection requirements under Indonesian law. It is commonly used by manufacturers, traders, and retailers who maintain significant inventory levels and require flexible financing solutions.

What sections should be included in a Inventory Financing Agreement?

1. Parties: Identification of the financing party (lender) and the business receiving financing (borrower)

2. Background: Context of the financing arrangement and brief description of the business relationship

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Facility and Purpose: Details of the financing facility, including amount, purpose, and utilization rules

5. Security Arrangements: Description of security interest over inventory and registration requirements

6. Conditions Precedent: Conditions that must be satisfied before the facility becomes available

7. Drawdown Mechanics: Procedures and requirements for accessing the facility

8. Interest and Fees: Interest rates, calculation methods, and applicable fees

9. Repayment Terms: Repayment schedule, prepayment provisions, and payment mechanics

10. Inventory Management: Requirements for inventory storage, maintenance, and reporting

11. Representations and Warranties: Standard and specific representations regarding the business and inventory

12. Covenants: Ongoing obligations regarding business operations and inventory management

13. Events of Default: Circumstances constituting default and consequences

14. Enforcement Rights: Lender's rights and remedies upon default

15. Boilerplate Provisions: Standard provisions including notices, amendments, governing law

What sections are optional to include in a Inventory Financing Agreement?

1. Insurance: Detailed insurance requirements when specific insurance arrangements are needed for the inventory

2. Third-Party Warehouse Arrangements: Required when inventory is stored in third-party facilities

3. Multiple Location Provisions: Required when inventory is stored across multiple locations

4. Export/Import Provisions: Required for inventory involving international trade

5. Guarantees: Required when additional parties are providing guarantees

6. Environmental Compliance: Required for inventory of hazardous or regulated materials

7. Islamic Finance Provisions: Required when the financing needs to be Shariah-compliant

What schedules should be included in a Inventory Financing Agreement?

1. Schedule 1 - Facility Details: Detailed terms of the facility including limits, pricing, and utilization requirements

2. Schedule 2 - Inventory Description: Detailed description of eligible inventory and valuation methods

3. Schedule 3 - Storage Locations: List and details of approved storage locations

4. Schedule 4 - Form of Drawdown Notice: Template for requesting drawdowns under the facility

5. Schedule 5 - Reporting Requirements: Templates and requirements for inventory and financial reporting

6. Schedule 6 - Security Registration Forms: Forms required for registering security interests under Indonesian law

7. Schedule 7 - Insurance Requirements: Detailed insurance specifications and approved insurers

8. Appendix A - Compliance Checklist: Checklist of ongoing compliance requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions



















































Clauses






































Relevant Industries

Manufacturing

Retail

Wholesale Trade

Automotive

Electronics

Textiles

Food and Beverage

Agriculture

Pharmaceuticals

Construction Materials

Consumer Goods

E-commerce

Industrial Equipment

Chemical Products

Relevant Teams

Legal

Finance

Treasury

Supply Chain

Operations

Risk Management

Compliance

Credit

Procurement

Warehouse Operations

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Commercial Director

Supply Chain Manager

Warehouse Manager

Legal Counsel

Risk Manager

Credit Manager

Operations Director

Compliance Officer

Financial Controller

Procurement Manager

Inventory Control Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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