Sourcing new business as a lender can sometimes feel like waiting for rain in a drought.
From a lending perspective, you probably have some thoughts about the role floorplan finance plays in your service offering, whether you already provide it, are reluctant to consider it, or are wondering about the potential benefits of introducing it.
There are a few misconceptions around the difficulty and practicality of expanding on or introducing floorplan finance as a service to your customers. You might be thinking:
“We don’t need to look at providing floorplan finance. We have other products on offer.”
Even so, floorplan finance is an opportunity that can appeal to your existing clients as well as to potential new ones. If banking services are in use within your operating areas, there is invariably an opportunity, such as a car dealership, that would be able to utilize a floorplan credit line. Providing additional services to customers you already have is one of the easiest ways for you to increase your market share and profits. Floorplan is a more specific form of inventory finance that can be managed just as rigorously with the right software in place.
You may be already providing business lines of credit today that are actually being used for financing of inventory assets – this can open your organization to far greater risk as you are not managing the credit with software that can track the line’s use at an asset level.
“We can’t compete with the national big players in our area.”
The nature of national banks means that services, though broad, are often spread thin and come at a higher cost to the customer. Bells and whistles don’t appeal to everyone, so being able to offer a more local choice immediately puts you in a better position for service quality and convenience as well as cost to customers.
“My business isn’t big enough to look at providing floorplan finance. It would cost too much.”
Finding a solution that is scalable to your business needs is key to managing your growth— but this also goes for smaller businesses, too. With this in mind, floorplan finance doesn’t need to cost the earth: the ideal system correlates directly to the volume and size of your business, be it large or still on its way there.
“The technicalities would require too much staff training and additional resource.”
With an efficient system in place, most of the work is automated and done for you. This includes enhanced customer service experience capabilities such as a dealer self-service portal and the exception-based processing design of the overall system itself. The highest standards of risk management and auditability are additional benefits derived from utilizing software designed specifically to support floorplan lending.
To start, you’ll just need to make sure that you have a single person within your organization who understands floorplanning; the beauty of new innovative systems is that they can manage the rest for you whilst leveraging your existing resources, whether you already have a limited floorplan client base or you’re diversifying your portfolio.
Whether you’re scaling up, looking to expand your offering for your current clients or simply looking at how to broaden your horizons, offering floorplan finance – or upscaling its current iteration – could open new doors.
What’s your next step?