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Understanding Important Floor Check Terms and Tactics
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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:
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- 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.
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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.
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