From the Lighthouse

Understanding Important Floor Check Terms and Tactics

As we cruise into the summer season, it’s that time of the year when “floor checks” are in full gear. Commercial finance companies like Northpoint are in the field conducting inventory checks and adjusting the “Item Status” designations as applicable.

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A few quick definitions:

• Floor check is the physical act of inspecting and confirming the serial number of products that comprises the collateral which a floorplan lender has advanced funds for dealer purchase from a manufacturer.

• “Item Status” on the marine front refers to any boat that is flagged “not in-stock” after a floor check from the previous reporting period. 

The foundation of the program in which this inventory is financed is “Pay as Sold (PAS)” which represents the legal agreement for the sale of the inventory once funds have exchanged hands from the consumer to the dealer. Upon receipt, such funds must be paid to the lender who enabled the dealer to acquire the inventory. Technically, this begins when a deposit is made on the inventory by the consumer; such funds should be immediately applied to that inventory. On rare occasions when a sale falls through, the funds are then credited back to the dealer.


Once the floor check is complete, there is a reconciliation between the dealer and floor checker. During this process, any missing product is accounted for, with its status explained and defined.  

Old school floorplan people believe there are two codes: “In-stock” meaning the boat or item was seen and verified; and “Sold” – meaning the item is missing and funds are due immediately.  

At Northpoint, we appreciate the reality of the situation: there are legitimate reasons a boat or item may not be at the dealership during a floor check. In response, Northpoint has created more than 20 Status Codes to assist floor checkers in communicating with a dealer to designate missing inventory. While taking this more flexible approach to floor checking may increase the risk of providing floorplan, it simultaneously increases floorplan service. 

A few examples of status codes that Northpoint has developed include the following:

“Sold and Unpaid (SAU)” – the boat or item is sold and the dealer is making payment to clear this from their floorplan.  At times, higher risk accounts may have reasons not to make a payoff immediately, which ultimately drives more follow-up time and the need to enact measures to get the boat paid off.  This is the primary driver for a loss. Dealers who are unable or who choose not to release (make payment) within five business days of sale create the most work, greater risk, increased interest rates and reduced flexibility.   

Contract Pending (CP) – this code references there is pending funding from the Retail Finance source.  If the boat has been released to the consumer without payment/dealer receiving the funding, then this boat is considered SAU.  

Demo – this refers to an approved “demo boat” which the OEM should have approved and agreed in advance to have in place.  The challenge to the floorplan company is this information is not always communicated, resulting in extra work and time to confirm approval. If the demo was not approved by the OEM, there are options where the dealer may qualify for the demo, but it requires them to pay equity into the boat as it’s actively being used.  

Dispute – this code represents a wide range of items for why the boat is missing or may include an invoicing issue with the boat.  This item carries higher risk as it is the most loosely defined status code.  

At Northpoint, we fully understand the process … and we’ve taken the steps to provide the best service possible for our customers, while equally mitigating our risk.


We are frequently asked by new business owners about how floorplan companies lose money.   

Floorplan companies typically lend at 100% of the invoices. This enables more businesses access to inventory, which expands markets for OEMs and dealers.  Historically, the banking industry advances significantly less than this level.  The reason floorplan companies lend at a greater loan to value is due to the displines and tools utilized through Operations including floor checks and 1:1 dealer follow-up if they have not made a payment based on their inventory turn cycle.

Here’s a surprising fact: currently, over 23% of the marine portfolio is in a “status code” other than “In-stock.” This, coupled with shortfall in the inventory when an inventory is resold after a repossession, means the losses can in fact be significant for the lender. 

Our ability to manage this situation while maintaining a rock-solid and high-level service relationship with our dealers requires a balancing act involving strong communications, skills and finesse.

Historically, we know and appreciate that there is less than 1% of the dealer base with any intention of floating payments or not paying floorplan when product is sold.  However, maintaining the portfolio requires that our operation team institute necessary floor checks, cash audits, and follow-up on missing inventory.  When this runs unchecked, then banks and financial institutions become unable to invest, which ultimately dries up the liquidity for business in the industry and lead to a significant reduction of boat sales throughout North America. 

Our goal is writing this column to help educate our valued customers, so they understand the rationale behind floor checks, as well as the measures we have taken to support your business with as much flexibility as possible. 


Please be kind to the floor checker who may interrupt your day … or quickly respond to the Account Manager when he or she calls. The goal of our entire team is to support your business and positively enable the expansion of boat sales throughout North America. 

Thank you for your business … your understanding … and your support!