Floor Plan Financing Accounting

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.

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. These loans are often secured by the inventory purchased as collateral. You need simple solutions to run your business and floor plan financing could streamline your inventory acquisition and reduce some of your administrative costs. Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold.

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. Floor planning is commonly used in new and used car dealerships. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved. Dealers can then use their floor plan line of credit to purchase inventory from auctions and other inventory sources.

Floor planning is a type of inventory financing for large ticket retail items.