3. Managing Cash Flow
While floor plan financing can improve cash flow by freeing up funds for other expenses, dealerships must exercise prudence in managing their finances. It is crucial to avoid situations where multiple bills mature simultaneously, potentially leaving the dealership unable to meet its financial obligations. Effective cash flow management ensures financial stability and prevents liquidity issues.
4. Regular Collateral Audits
Dealerships should ensure that lenders can easily verify their inventory during regular collateral audits.
When lenders encounter difficulties in verifying inventory, it raises concerns about the dealership’s ability to fulfill its loan obligations. Dealerships should prioritize maintaining an accurate and accessible inventory record.
Here are 5 ways to have a better audit experience.
5. Timely Inventory Turnover
In the auto retail business, the ideal timeframe for vehicle turnover is within 45 days. As time progresses, profit margins decrease, making it crucial to sell vehicles promptly. If a particular vehicle remains unsold for an extended period, dealerships may need to consider auctioning or selling it at a reduced price to avoid inventory stagnation and maintain a healthy turnover rate.