Floor Plan Financing Accounting

This article reviews how you can manage floor plan financing with quickbooks.

Floor plan financing accounting. Floor planning is commonly used in new and used car dealerships. Retailers use a short term loan to purchase inventory items and the loan is repaid as inventory is sold. These loans are often secured by the inventory purchased as collateral. 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.

You need simple solutions to run your business and floor plan financing could streamline your inventory acquisition and reduce some of your administrative costs. 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. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved. 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.

Retail floor planning also referred to as floorplanning or inventory financing is a type of short term loan used by retailers to purchase high cost inventory such as automobiles.