The Floorplan Finance Process at Online Car Auctions

Dealer checking his phoneOne of the key advantages floorplan financing offers is the ability to pay for inventory across both physical and digital auction sources. As more dealers purchase inventory digitally, the ability to floor plan vehicles from these online auctions becomes more and more apparent. Let’s walk through a few key steps to floor plan vehicles from online car auctions.

Search and Submit Bids for Inventory
Obviously, dealers need to have specific vehicles in mind to purchase in order to stock their lots. Using digital auctions like OVE.com, Manheim Express and ACV means dealers can search for inventory from the comfort of their offices, instead of visiting a physical auction.

After picking out inventory it’s simply a matter of submitting, and winning a bid! Before bidding, be sure to always consider the max amount you’re willing to spend on a vehicle. More often than not, profits are made when you buy, not necessarily when the vehicle sells.

Floor Plan Vehicles
Once you win a bid for a vehicle, the check out process should be pretty simple. Though every digital auction check out will vary, a few key options remain the same. You’ll have the opportunity to select a method to pay for your vehicle purchase, and a floor plan will often be one of those options.

Arrange Transportation
After purchasing a vehicle from a digital auction, transporting it to your lot becomes a new challenge. Many digital auctions have integrated transportation options. Dealers are able to select a provider and move vehicles directly to your lot. Depending on the floor plan provider and the transportation you select, you may be able to floor plan your transportation charges.

Through a partnership with Ready Logistics, NextGear Capital dealers are able to provide transportation

With the growing shift to digital purchasing, the ability to floor plan your vehicles on digital auction platforms becomes crucial to maintaining overall cash flow. Use NextGear Capital floorplan financing to make sure you have the buying power you need to stock your lot with inventory.

If you don’t have a NextGear Capital line of credit, feel free to apply, reach out to one of our representatives, or contact us for any additional questions.

Increasing Profit Margins through Floor Planning

Dealer walking between carsSkeptical dealers don’t always understand that a floor plan can be leveraged to help increase a dealership’s profit potential. The general sentiment from these dealers is that because your dealership doesn’t own the vehicles and will owe additional fees on a floor plan, your dealership won’t be able to profit. However, dealers have to consider the other benefits of improved cash flow, the ability to stock additional inventory, and the auxiliary benefits that come with a floor plan that can be used to help increase your dealership’s potential profitability.

Stock Additional Inventory
The hallmark benefit of using a floor plan loan is getting extra buying power to stock more inventory on your dealership’s lot. For the most part, dealers with more inventory have more opportunities to sell. When dealerships have more inventory to sell, you have more opportunities to profit.

Improved Cash Flow
Another key benefit of a floor plan is improved cash flow. When dealership savings aren’t tied up in inventory there’s additional flexibility in how you can disperse funds. If additional investment is needed in another department, it can be much easier to make funds available for those expenses.

Spend Time Where It Really Matters
When dealers use a floor plan line of credit there are a number of auxiliary tasks that a floor plan provider can assume. For example, floor plan lenders frequently help dealers manage titles, and can often help dealers complete additional title work in select states, saving a trip to the local DMV branch. Letting a partner step in and handle those additional tasks gives you the opportunity to save time, and subsequently allows you to focus on the activities that matter the most to your dealership.

Make Money When You Buy and Know You Buy Right
It’s said that most dealers make money when they buy a vehicle, not necessarily when it gets sold. Not only does a floor plan provider help dealers buy inventory due to increased buying power, but some offer the extra ability to figure out if you’re making a good buy.

For example, NextGear Capital dealers have the ability to access Manheim Market Report and Kelley Blue Book valuations from the convenience of the Account Portal.

Give your dealership extra fuel to succeed by considering how a floor plan can positively affect your potential profitability. Feel free to give us a try by applying for a line of credit, or letting us know if you have any questions or hesitations by contacting us, or reaching out to your region’s representative.

Use Self Reconciliation to Clear Audits, Faster

Dealer using the self reconciliation functionality on Account PortalFloor plan financing companies request periodic audits to ensure that borrowed funds are used to purchase vehicle inventory. Though an audit can be an occasional inconvenience, accounting for vehicles shouldn’t take more time away from your key dealership activities than necessary. NextGear Capital dealers can take advantage of a more streamlined and convenient auditing process with Self Reconciliation. Start accounting for the vehicles on your lot, your way.

What is Self Reconciliation?
Self Reconciliation is an Account Portal functionality that lets dealers clear floor plan audits from the convenience of a mobile device. After logging in, dealers simply navigate to the “My Audits” tab, select a unit, take a number of needed images, submit and then clear audits in real-time. Since units are quickly cleared, additional follow-up isn’t necessary. It’s that simple!

Beyond just clearing audits, the My Audits tab allows floor plan financing used car dealers to have additional visibility and transparency over the units and any associated fees that need reconciled. Plus, vehicles are added to a historical reference so dealers have access to a record of cleared units.

How does Self Reconciliation work with the overall auditing process?
Most dealers will still have in-person audits that occur on a rolling calendar. However, for cars that aren’t accounted for because of repairs or transportation, dealers can use Self Reconciliation to quickly and simply report that those cars are back on their lot.

Beyond Self Reconciliation, NextGear Capital dealers have access to one of the most flexible auditing processes in the industry. With extended auditing timelines, streamlined notifications, fee and vehicle transparency, and the ability to advise on out of office periods, dealers have the ability of clearing audited vehicles when it’s most convenient for their business. Beyond these key features, streamlined notifications mean that dealers have fewer business interruptions.

Focus on the dealership activities that matter most to your dealership. Self Reconciliation combined with other audit process improvements means NextGear Capital dealers have access to one of the simplest and most flexible auditing experiences in the industry.

Visit ngc.dev3.rt.gw/self-reconciliation/ to learn more about this Account Portal functionality.

Floor Plan Vehicles to Help Save You Time

When you run a dealership, time is your most valuable resource. Finding and acquiring vehicles to stock your lot, attending to customers, not to mention the paperwork required for these activities, can take up a lot of time. When there are limited hours to complete a variety of tasks, the most valuable use of your time is to focus on the activities that contribute most to your bottom line. Though many dealers initially floor plan vehicles for additional cash flow flexibility, a secondary benefit is that many floor planning dealers find they have the ability to save time and effort on a number of tasks.

Reduced Administration
Though many dealers initially use their line of credit for additional cash flow flexibility, a secondary benefit is that many floor planning dealers find they have the ability to save time on a number of tasks. For example, cash-buying dealers often have to take additional steps and keep track of more paperwork at auction to ensure their new inventory is properly purchased. With a floor plan, dealers simply bid and put the unit on their line of credit.

Holistic View of Floor Planned Vehicles
It can be tough to track how long a vehicle has been on a dealer’s lot, especially for larger dealers with large volumes of inventory. Too much aged inventory can seriously deplete a dealer’s potential profitability. Though many dealers have their own processes and methods to keep track of specific vehicles, floor planning dealers often have a quick, simple view of their floor planned inventory through their account management platforms.

Additionally, dealers frequently use the terms of their auto dealer floor plan to their advantage. That first floor plan payment often triggers an evaluation of whether or not a unit was a good buy, or if alternate inventory exit strategy plans need to be put into action.

Spend Less Time on Titles
The constant churn of buying and selling cars means that dealers have the revolving responsibility to manage titles for a variety of different vehicles. Though dealers need to have a process in place to handle titles, dealers that floor plan vehicles are often able to offset a wide variety of title management tasks. Additional title work from select states can also often be requested, leaving dealers free from an afternoon at the local branch of the DMV.

Dealers have enough to do without spending time doing busywork. Get back to business and spend time on the activities that matter most to your bottom line with a floor plan line of credit. Apply now, or contact us for more information about what a floor plan could do for your dealership.

NextGear Capital vs Other Car Floor Plans

When it becomes clear your dealership needs an influx of cash, determining which car floor plan source you should use becomes a challenge. There are few different dealer lending options available, and figuring out who will be the best partner can take some time and research. To help simplify that research process, consider some of the top advantages a NextGear Capital floor plan offers over other car floor plans.

Fewer Purchasing Limitations on Inventory
The purpose of getting a car floor plan is acquiring additional buying power to purchase in-demand inventory. However, some floor plan providers have restrictions on the type of inventory that can be purchased based on factors like the year, make, model and mileage. Occasionally, even if a unit doesn’t quite match preferred stats, other floor plan providers may only fund a portion of the vehicle, further reducing a dealership’s cash flow.

With a NextGear Capital line of credit, there are fewer limitations on the types of inventory that can be purchased. This gives dealers additional inventory options, and allows dealers to have more cash flow compared to other lenders.

Simplified Purchasing Process for Auction and Non-Auction Inventory
Using a floor plan line of credit at auction is a much simpler process compared to buying units outright with dealership savings. Overall, there’s a reduced amount of paperwork and follow up required to ensure units are properly purchased.

Though reduced time spent following up on units purchased at auction isn’t an exclusive benefit to floor planning with NextGear Capital, the streamlined process to purchase non-auction inventory is a top benefit.

If desired inventory isn’t found at auction, compared to other floor planning partners, the time spent purchasing non-auction inventory with a NextGear Capital line of credit is significantly reduced. With Rapid Pay, dealers simply submit a request through Account Portal and send titles to NextGear Capital with a complementary FedEx waybill. Expedited funding is available when dealers give notice they have a title in-hand, giving dealers the opportunity to get funding, faster.

Industry’s Most Flexible Audit Process
Most floor planning providers have a process in place to ensure the funds were indeed used to purchase inventory. Though a necessary part of the floor planning process, audits aren’t meant to take more time than necessary. Be sure to ask any potential floor planning partners what their audit process looks like.

NextGear Capital aims to ease the audit process for dealers as much as possible. Though an auditor will periodically visit your lot, sometimes there are vehicles that won’t be accounted for that day because a unit will be getting repairs or being transported. With the launch of Self Reconciliation, dealers are able to clear units from the convenience of their mobile device. Plus, extended reconciliation timelines, fewer interruptions and the ability to advise on out-of-office periods makes the overall NextGear Capital auditing process one of the most flexible in the market.

Dealers have to make careful decisions about the partners they bring on to help support their business. If you’re considering bringing on a floor plan provider, do your due diligence to make sure their offerings are a good fit for your business.

If you’re considering NextGear Capital as a car floor planning partner please apply, or contact us or your dedicated representative with any additional questions.

Comparing Floor Plans vs. an Auto Bank Floor Plan

Dealer considering the difference between a floor plan and auto bank floor planWhen used car dealers realize their business needs an influx of funding, they’re presented with a few different options. Most prominently, those options are typically a loan from a local bank, or funding from an independent floor plan financing provider. If you’re considering either of these selections, it’s crucial to be aware of few key differences between an auto bank floor plan or a line of credit from a floor plan provider.

Collateral
Depending on the type of loan needed for your business, auto bank floor plan funding might be backed with personal assets, such as a home. However, for dealer floor planning, the collateral used is the inventory purchased. For most dealers with floor plan financing, this means it’s not necessary to put down personal assets to receive needed funding.

Account Management
With any financing partner, there’s a purchasing process involved to acquire inventory from auction and non-auction sources. Depending on your funding source, what’s required from an account management standpoint can vary widely.

With a bank floor plan, dealers often have to follow a majority of the same processes used when buying inventory with cash. This can include keeping track of what funds need to be released when, and personally making sure titles are correctly managed. Though these tasks aren’t necessarily difficult to accomplish, they certainly take up a dealer’s valuable time and effort.

Dealers that use a floor plan lender to buy inventory have access to auxiliary services that can alleviate some time and effort from those administrative tasks. Floor planning dealers can purchase inventory with the confidence that the auction and seller will be properly compensated. In addition, title management is handled on the dealer’s behalf, further saving time and effort for dealers.

Financing Stability
Any dealer needs assurance that their funding partner is going to stick around. Consider a bank’s history with auto floor planning loans, and the level of attention they are capable of providing. Most banking institutions aren’t exclusively devoted to the needs of car dealers.

On the other hand, a floor plan provider is solely committed to making sure dealers have the funding they need to do business.

Types of Inventory That Can Be Purchased
Most dealers like to stock their lots with certain vehicle types, but aren’t eligible to fund those units with a bank floor plan because of certain inventory restrictions. Often, those restrictions are based off of a vehicle’s mileage, make, model, or year. Unfortunately, those unit limitations can significantly reduce a dealer’s potential pool of available units and subsequently, their cash flow.

With a floor plan, there are often fewer restrictions on the types of inventory that are able to be financed. In turn, dealers are able to purchase a wider variety of in-demand units to retail to consumers.

No matter what lender you choose for your dealership, whether a bank floor plan or a floor plan lender, it’s essential to select the best funding partner for your needs.

If you have additional questions about how of a floor plan line of credit can help improve your dealership’s cash flow and help with overall operations, we can connect you to your representative. Or, feel free to apply or contact us with any other inquiries.

How a Flooring Financing Plan Compares to Cash

Cash flow is the lifeblood of any business, but this especially rings true for automotive dealers. Used car dealers have to consistently balance vehicle sales, the funds they have on hand and the inventory they’re able to purchase and have available on their lot. Compared to using cash, a flooring financing plan can make that balance easier.

Buying vehicles with cash has a lot of perceived benefits. The vehicles on the lot are owned in full, interest and fees aren’t collected, and all earnings after a car sells go directly into the dealership’s account. Despite that, many dealers don’t consider the full cost or potential floor plan mistakes of using dealership funds to buy inventory.

One of the top reasons dealers use a floor plan financing line of credit is to improve their overall cash flow. Most dealers have an amount of funds set aside to handle a variety of operational expenses. However, if a dealer also has to use those funds to purchase inventory, it can be difficult to purchase enough vehicles to sustain current business.

By using a floor plan to purchase inventory, dealers have the ability to use their cash-on-hand for other expenses. For example, instead of using $12,000 cash to purchase two $6,000 vehicles, dealers can use that $12,000 on hand to make other improvements to their dealership services or other offerings.

Another drawback of using dealership savings to purchase vehicles is that all funds invested in the vehicle aren’t liquid. If the car sits for months without being sold, there aren’t simple options to get those funds back.

With a floor plan, funds can be used to help build the dealership instead of parked in inventory. When dealership savings are tied up in inventory, those funds depreciate along with the value of the vehicle. Even if that aged inventory is sold back at auction or to another dealer, the chances of getting the original purchase price back aren’t guaranteed. Especially considering the logistics involved in any attempts to recoup costs.

A key benefit of a flooring financing plan is that a dealer’s personal investment is delayed until a contractually determined number of days. That fee is a minor fraction of the vehicle’s purchase price. The full value of the original loan plus any additional interest or fees aren’t due until the vehicle is sold. Once that happens, dealers can immediately pay off the original loan amount plus interest and fees, and realize additional profits without having to front funds to acquire the vehicle!

Have a better balance of your dealership’s funds with dealer floor planning. Apply now, contact us or reach out to a NextGear Capital representative.

NextGear Capital Makes Streamlined Auditing Process Available Nationwide

Dealer auditing a vehicleDealers should be spending their time and energy focused on activities that benefit their customers and their bottom line, not managing ancillary tasks around their dealership. To help address a major pain point for dealers that can free up more of their time to spend on core business operations, NextGear Capital, a Cox Automotive brand, announced the national rollout of their new Self Reconciliation feature, available through Account Portal.

The Self Reconciliation functionality simplifies the necessary floor plan auditing process with a streamlined, mobile-first solution. Dealers can log-in to the NextGear Capital Account Portal through their mobile device, navigate to the My Audits tab, view vehicles to reconcile and take photos to submit and clear outstanding audits in real-time.

“It’s a lot quicker, it’s simplified and it’s nice not trying to have to put a piece of paper out there on a windy day,” said Geoff Gallup, manager at G5 Auto Sales in Fishers, Ind. “It’s down from a four-step process to a one-step process.”
Self Reconciliation, in combination with the Account Portal My Audits tab, puts important information at the fingertips of dealers and allows them to take action from the convenience of their computer, smart phone or tablet, making the NextGear Capital auditing process one of the most flexible in the market. Dealers can see a timeline of transactions and associated fee transparency, clear units in real-time and view a historical reference of units cleared.

“We know from talking with dealers that the auditing process has traditionally been a frustrating experience,” said Randy Dohse, NextGear Capital senior vice president of operations. “The national roll- out of Self Reconciliation gives independent dealers across the U.S. a new convenient way to handle audits, saving time and reducing errors. They can use their mobile phone to capture and reconcile audits on the spot, and move onto the business of selling cars.”

Along with Self Reconciliation capabilities, other improvements to the auditing process have substantially decreased business interruptions by up to 80 percent. Streamlined notifications, extended reconciliation timelines and the ability to advise on out-of-office periods are a few key changes implemented to help dealers efficiently manage their floor plan account.

NextGear Capital’s recent efforts to streamline the entire auditing process translated into efficiencies for Wholesale Inc. in Nashville, Tenn. “This saves three people two weeks of time following up on units,” said Chad Cunningham, vice president of Wholesale Inc.

By taking advantage of the additional flexibility afforded by these improvements in the auditing process, NextGear Capital dealers are able to focus on the activities that matter most to their dealership.

For more information about NextGear Capital’s Self Reconciliation capabilities or the overall auditing process, visit ngc.dev3.rt.gw/self-reconciliation/ or connect with your NextGear Capital representative.

Six Ways Independent Dealers Can Win in 2019

Tips for the new year from NextGear Capital’s VP of Sales, Lisa Mackie

At NextGear Capital, we pride ourselves on being more than just a lender. Our top priority is giving you the capital and resources you need to maintain your dealership’s success. As we start 2019, we want to thank you for choosing us as your floor plan partner and share a few reminders on a few ways you can succeed in the new year.

1. Dash to Digital: Look for ways to use new digital tools to make your life easier and your business more efficient. Options such as Account Portal enable you to conduct business 24/7, day or night, on mobile devices or computers. Take advantage of them!

2. Insist on Faster Funding: Time is money and liquidity is critical. You shouldn’t be waiting days to get funding on trade-ins or dealer-to-dealer purchases. This year, we were thrilled to see dealers embrace our new Rapid Pay feature for non-auction purchases. As the new year approaches, evaluate your needs regarding your trade-ins and inventory acquisition strategy so you can buy more cars that your customers want and need.

3. Maximize Cash Flow: Tying up your dealership savings to buy vehicles restricts your cash flow. Consider using your dealership savings to invest in operations, and secure a line of credit from your lending partner to keep your funds from being tied up in depreciating inventory.

4. Stick to 60 Days or Less: Speaking of speed, inventory turn should also be a top priority. We know it can be tempting to hold onto a vehicle in search of a better deal, but costs can mount too. A good rule of thumb is to move your inventory within 60 days.

5. Look at the Total Value: It’s easy to concentrate on interest rates when looking at different financing options, and lose focus on the total value of your lending options. What additional fees are involved? What are the terms? What kind of service does the lender provide? That low rate might not be such a good deal when it comes to lackluster support and restrictions on the type and general condition of inventory you’re able to purchase.

6. Choose Partners, not Vendors: Partners, not vendors, are invested in your long-term success. Reflect on which partners not only deliver exceptional products and services, but also provide education, training and strategic advice. Ask for expert insights from your lenders to help improve your bottom-line.

Considering these reminders can help your business thrive in the new year. And, as always, we’ll be there every step of the way to help guide your business to peak performance.