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3 tips to maximize profit – managing the Floor Plan in your dealership.

3 tips to maximize profit – managing the Floor Plan in your dealership.

1 minute 17 seconds read

Let’s see this example:

Franchised dealer: Floor Plan $5,000,000

Units in Stock: 166

Average unit in floor Plan: $30,000

Interest rate: 5% (sample)

Average Floor Plan interest cost per month $20,833

1).- Keep a streamlined cash flow and accounting system and pay the sold units sooner: Even a marginal decrease in days that you pay some sold units, can have an aggregate impact in the floor plan interest cost over the remainder of the year (June – December). There are different ways that this can be accomplished,

2).- Reduction on the Number of dealer trades: Again, looking at inventory management strategies, with just a small reduction of 10% of your monthly sales in dealer trades, can have a biggest impact in the interest saved over 6 months. Streamlining the inventory ordering for the mix of units in the following months and proactively monitoring the inventory, can be greatly beneficial to the bottom line.

3).- Delay arrival of some units: Review the inventory ordering system of your manufacturer and delaying the arrival of units not needed, even doing this only for 3 months of the year can aggregate to savings over the course of 3 months.

In a sample dealership with $5 million in inventory, this can aggregate savings of $30k or more over 6 months.

Please email me to get a sample spreadsheet of this calculation at info@krozkin.ca

Gabriel Krozkin has helped dozens of dealerships and dealerships groups achieve and surpass profit goals, working with franchised dealerships. Contact him for a non-obligation meeting to see how he can help your dealership. He can be contacted at info@krozkin.ca

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