Floor Plan Financing Accounting

The arrangement is most commonly used when large assets such as automobiles or household appliances are involved.

Floor plan financing accounting.

Floor planning is a method of financing inventory purchases where a lender pays for assets that have been ordered by a distributor or retailer and is paid back from the proceeds from the sale of these items. Much like a credit card a floor plan financing company extends a line of credit to a car dealer. Dealers can then use their floor plan line of credit to purchase inventory from auctions and other inventory sources. A floor plan is a method that a business such as an auto dealership can use to finance inventory that they are holding for resale without having to tie up their own capital in that inventory.

You need simple solutions to run your business and floor plan financing could streamline your inventory acquisition and reduce some of your administrative costs. Reduces the manufacturer s costs when a piece of merchandise from a manufacturer is received by the dealer who has a floor planning arrangement with a lender the lender notes the item and immediately sends the manufacturer a check for it. These loans are often secured by the inventory purchased as collateral. Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold.

This article reviews how you can manage floor plan financing with quickbooks.