Floor planning empowers independent auto dealers to simply fund and stock dealership lots with in-demand inventory. Though it’s exciting to finally be able to relieve dealership cash flow issues and purchase additional inventory, managing an auto dealer floor plan line of credit comes with its own set of responsibilities. Be prepared to manage your floor plan by considering the following tips.
Use Your Auto Dealer Floor Plan Line of Credit Responsibly
Though a dealer might be approved to utilize a $250,000 line of credit, that doesn’t mean they should immediately purchase $250,000 of vehicle inventory. Dealers that use their entire credit line to purchase vehicles are going to face a hefty bill if that inventory hasn’t sold before payoff time. Make inventory purchases at regular intervals, or when your dealership lot reaches a dealer-determined inventory threshold. That way, payments are manageably spaced.
Dealers that responsibly utilize their floor plans also have to stay on top of those manageably spaced floor plan payments. NextGear Capital dealers are are able to opt into a recurring and automated system that schedules payments with AutoPay, a feature of Account Portal.
Be Prepared for Audits
Floor planning companies conduct audits to ensure the funds given to dealers are correctly invested into vehicles for retail. Though inconvenient on occasion, audits often are a necessary piece of the floor planning process. Dealers that take the time to keep up-to-date records, organize bills of sale and hold on to repair shop receipts will frequently have an easier time managing the overall audit process. Every dealership will need to figure out a process that makes sense for their individual locations. Despite the occasional inconvenience, planning and preparation can smooth the overall audit process.
Keep Communication Lines Open
Dealership success relies on more than a line of credit. Dealers that take advantage of the partnership a floor plan financing company provides can often optimize overall dealership operations and profitability. Local representatives can provide additional insights, answer questions and can work to help dealerships manage their floor plan.
Additionally, dealers that keep in touch with their independent dealer floor plan partners are able to better communicate questions, concerns or issues they may encounter. Dealers that are proactive and honest with their floor plan lender are more likely to be in a position to ward off any potential issues.
Dealers who take these tips into consideration can ensure their floor plan is properly managed, and consequently, will likely have a seamless floor planning experience. If you have additional questions about your auto dealer floor plan line of credit, let us know and we’ll connect you with your local NextGear Capital representative.