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.

Floor plan financing accounting.

Floor planning is commonly used in new and used car dealerships. These loans are often secured by the inventory purchased as collateral. Much like a credit card a floor plan financing company extends a line of credit to a car dealer. Floor planning is a type of inventory financing for large ticket retail items.

This article reviews how you can manage floor plan financing with quickbooks. The arrangement is most commonly used when large assets such as automobiles or household appliances are involved. You need simple solutions to run your business and floor plan financing could streamline your inventory acquisition and reduce some of your administrative costs. Dealers can then use their floor plan line of credit to purchase inventory from auctions and other inventory sources.

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.