Floor planning is a special type of financing offered by lenders. Retail floor planning allows dealers the flexibility to offer the right product mix for customers to choose from. For example, dealerships for automobiles, recreational vehicles, and boats, as well as home goods retailers will turn to floor plan loans to purchase inventory.
What Is Retail Floor Planning?
Floor Plan financing is especially useful in businesses that are required to pay their suppliers in a shorter period than it typically takes them to sell that inventory to its customers.
Floor planning provides a solution to seasonal fluctuations in cash flow and enables a business to achieve higher sales volumes - just think about all of the extra inventory you build up to have a successful holiday season.
How Floor Planning Works (and How It’s Different From Consignment)
Floor planning is very similar to consignment, except that you take possession and own the inventory when you receive it, but you don't have to pay for it until it's sold, or until it's been in the store for a negotiated period of time.
However, you do own the inventory and have to pay for it sometime. Some floor planning companies want the ability to check the inventory serial number by serial number for the larger items, and others may just want to count the number of each model number on hand.
Why Floor Plan Financing Matters for Retailers
- Supporting seasonal inventory spikes (e.g., holidays or peak sales periods)
- Allowing broader product selection without upfront cash strain
- Enabling higher sales volume through better in-stock availability
- Protecting cash flow during long sales cycles
Floor Planning for Success With Windward System Five
Effective floor planning for high-value items is critical to the success of any dealer. If you have too much product, or worse yet, too much of the wrong product, you could get buried in financing.
You need a method to keep up with the due dates to avoid excessive interest charges.
Windward System Five can handle it for you. On the accounts payable side, you will be able to keep track of who you owe the money to (Floor Planning Company) and who you actually bought the inventory from (Supplier) and generate proper histories of each.
Windward's built-in floor planning finance module allows you to set up inventory financing with:
- Manufacturers
- Distributors
- Financial companies
Smarter Inventory Financing Leads to Happier Customers
With an optimized inventory, you can keep up with your financing obligations, while ensuring a continual product turnover so that your inventory doesn’t stagnate. You continue to win over Happy Customers.
Windward System Five is packed with features that keep you organized so that you can spend valuable face time with your customers.
Check out How to Know When It's Time To Implement an ERP.
Is It Time to Upgrade Your Inventory & Finance Systems?
If floor planning feels manual, risky, or disconnected from your inventory data, it may be time to modernize with Windward Software.
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