Every dealer uses a few different metrics to evaluate the success of their business. A floor plan is a crucial part of your dealership’s operations, and there are a few key characteristics that indicate the condition of your auto floor planning account. Consider monitoring the following metrics to get a full view of your dealership’s overall health.
Turn Times
One of the key measurements of a healthy dealer is their average turn time, or annual inventory turn. How many times per year can your dealership sell out your entire lot? Most dealers typically turn inventory approximately every 60 days to avoid accumulating aged inventory.
On-Time Payments
Though it may seem like a basic tenet of running a business, making payments on time is a key indicator to a floor plan lender that you’re operating a healthy dealership. For NextGear Capital dealers, enrolling in AutoPay allows you to always pay on time and avoid late fees!
Utilization
Healthy floor planning dealers consistently utilize their floor plans to purchase the inventory their market demands, and keep their credit usage at appropriate levels. Typically, we recommend a floor planning mix of 70/30 of a dealer’s floor plan and cash on hand to ensure dealer overhead is covered.
Communication
The dealers that invest in an ongoing relationship with their floor plan lender get more than just a line of credit. Staying connected not only helps you to fine-tune your floor plan management, but it also opens the door to discussion of your dealership’s strategy, and suggestions to improve overall outcomes.
Consistently Cleared Audits
Most floor plan companies have an auditing process to ensure the funds supplied to dealers is used for vehicle inventory. On occasion when an auditor stops by, dealers will have a few units unavailable because they’re off-site getting repaired or reconditioned. The dealers that keep careful records of the location of these off-site units and have the ability quickly reconcile them, build additional trust.
Based on these traits of a healthy dealership, how does your dealership stack up? Do you see gaps in your relationship with your floor plan provider?
If you aren’t satisfied with your current dealership’s current numbers or auto floor planning relationship, contact us or reach out to a NextGear Capital representative. We’re dedicated to providing your dealership with buying power and partnership to help you succeed and thrive.