Considering that cash flow needs have been a concern, especially over the past year, it is a perfect time to learn about the benefits of partnering with a floor plan financing provider.
What is inventory finance?
Also known as “floor planning” or “wholesale finance,” inventory finance is when a line of credit is established between a manufacturer or distributor and a dealer. This line of credit provides the dealer with an extended amount of time to pay for the purchase of inventory. Manufacturers or distributors in the construction, transportation, and industrial industries can also develop extended payment terms for their dealers by working with a floor plan financing provider. The industry typically follows a pay-as-sold or scheduled pay model, meaning the dealer can purchase inventory without upfront costs. Establishing a partnership with a floor plan financing provider will contribute to the financial stability of a dealer’s business while maintaining an ideal amount of inventory for long-term growth. This partnership will maximize sales opportunities and give a dealer’s business more control over expenses due to a longer payback period.
What products can be financed through a floor planning program?
Common equipment purchased by dealers are aerial work platforms, cranes, forklifts, excavators, skid steers, dump trucks, road building equipment, different types of vehicles, and much more.
How does floor planning work?
DLL’s main goal is to provide asset financing solutions for businesses, manufacturers, and suppliers. Through inventory finance, DLL will pay the manufacturer for your requested inventory within a few business days. With a DLL line of credit, approved dealers are eligible to receive the equipment immediately after purchase.
One method of repayment, the pay-as-sold model, sets expectations that the dealer will pay the finance vendor as soon as the product from the manufacturer is sold to the customer.
Dealers will pay DLL according to the manufacturer’s established terms and be expected to pay in full with interest-free terms on a predetermined date in the future. This process enables the dealer’s business to adapt to cash flow needs over an extended period of time and turn inventory faster, which can result in higher profits.