Floor Plan Inventory Accounting

A longer turn time for inventory eats into cash flow.

Floor plan inventory accounting.

Contrary to common perceptions most car dealers do not pay cash for the. And in a soft economy that can pose a serious problem both for the lender and the retailer. With floor plan financing you will work with a third party financing institution a floor plan financing company to. Floor planning is a type of inventory financing for large ticket retail items.

Also if inventory financed by a floor plan loan is moving slower than expected the lender may ask for payment from the dealer for interest and possible depreciation of its collateral. 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. Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold. The holding cost per unit per day is a useful metric that can help you keep your inventory balanced as well as determine how quickly you might need to turn a unit.

This article reviews how you can manage floor plan financing with quickbooks. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved. 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.