Northpoint establishes a revolving credit facility for each dealer to purchase inventory from their respective suppliers. As the inventory is sold to end-users, the borrower repays Northpoint. Each month, the manufacturer or the dealer, pay Northpoint interest to support the financing.
Inventory financing, also referred to as floorplan financing, provides a variety of benefits at both the manufacturer and dealer level. Manufacturers are able to increase the credit capacity of their dealer base, driving sales growth. In addition, they reduce risk and administration by effectively outsourcing the credit and collection process to Northpoint and are able to achieve specific and consistent payment dates. Dealers are able to increase their stocking levels and make more sales by having inventory on hand. Cash flow is improved by not having to pay out of pocket to secure inventory. The Northpoint advance rate on inventory, typically 100%, is much higher than a local bank can provide.
Two variations of inventory financing are available. Pay-As-Sold financing pertains to slower turning products with serial numbers. Under this scenario, dealers make payments as the inventory is sold. Inventory inspections are conducted regularly to verify the collateral and dealer performance. Scheduled Payment Plan financing is used in instances where the inventory turns rapidly or may lack serial numbers. The repayment structure is based upon anticipated and historical inventory turns.