Commercial vehicle financing: An overview of floorplan finance
Floorplan finance is a strategic solution through which manufacturers and dealers manage their inventory and cash flow. It is more than just a financing solution; it's a partnership between manufacturers and dealers aimed at optimising operations and driving growth.
At its core, floorplan finance involves manufacturers partnering with a financier to set up a credit line with their dealers, allowing them extended time to pay for the inventory they purchase. This arrangement typically follows a pay-as-sold (PAS) model, enabling dealers to acquire inventory without upfront payment, thus enhancing their financial stability.
For dealers, floorplan finance opens doors to a myriad of benefits:
- Increase purchasing power: Amplify your capability to stock a diverse range of products, giving your customers more choices and boosting your competitive edge.
- Improve cash flow management: Say goodbye to the burden of excessive borrowing and experience smoother cash flow operations, allowing you to focus on what you do best – selling.
- Boost sales potential: Elevate your bottom line by unlocking untapped sales potential through our strategic financial solutions, tailored specifically for your business needs.
- Simplify inventory management: Navigate inventory effortlessly with our user-friendly online portal, streamlining your processes for enhanced efficiency.
Manufacturers also reap significant rewards from floorplan finance:
- Shorten days sales outstanding: Accelerate cash flow by minimising the time it takes to collect payments, ensuring a more agile financial model.
- Increase dealer purchasing power: Empower your dealers with greater purchasing capacity, fostering incremental revenue and market stability.
- Mitigate the risk of dealer's payment: Transfer the risk of dealer payments to our finance solutions, providing financial security for you to focus on innovation and product development.
- Gain inventory visibility: Gain real-time insight into your inventory through our online portal, offering transparency and control over stock levels.
Floorplan finance stands as a cornerstone of modern asset financing, offering manufacturers and dealers alike a powerful tool to optimise operations, drive growth, and achieve long-term success.
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Floorplan finance: Special solution
Used equipment financing: Given Australia’s geographic location, sourcing a new fleet of trucks or trailers may often take from 18-24 months, if not longer. Which is why heavy vehicle dealers often sell used, and rental machines along with parts.
Total financing solutions can offer special financing for trade-ins and used equipment. These solutions consider each vehicle individually, helping dealers expand their used fleet inventory. With used equipment floorplan finance, dealers can manage cashflow while trading in used heavy vehicles. This in turn supports sustainability by extending equipment life, reducing steel and iron consumption, and avoiding carbon emissions from new manufacture.
Commercial vehicle financing: Lease and Loans
Leases and loans are designed to make heavy vehicles available to end-user businesses without them requiring immediate upfront payments. They ease the pressure on the businesses by spreading out the payments over time, limiting outgoing cashflow.
Leases even offer the choice of offering to purchase the vehicles at the end of term, returning them to the dealer or upgrading to newer models. Such flexibility and choice make lease programs particularly lucrative. New developments and fast-changing technologies are a driver to choose for a flexible leasing solution. Moreover, for dealerships, loans and leases open ways to drive repeat businesses, customer retention and loyalty.
Types of leases and loans:
In Australia, transport equipment leasing can be offered through Fair Market Value (FMV) lease. This type of lease allows customers to spread out their payments into installments while enjoying the flexibility of return, upgrade or offering to purchase at the term-end at a fair market value, calculated on depreciation, asset costs and market conditions.
Loans are a more direct way of extending credit lines to customers with payments spread across monthly installments. It, however, doesn’t cover maintenance costs and is defined by ownership certainty at the end of the loan term.
Benefits for customers:
- Cash flow management: Provide your customers with flexibility of cash flow management by eliminating the need for upfront payments.
- Ownership choices - Bring more equipment ownership choices to customers regarding whether they want to own the vehicles, return, or upgrade them at the end of term.
- Soft cost coverage for leases - Extend the convenience of coverage on soft costs and maintenance of equipment to customers with leases.
- Immediate upgrade - Increase your customer’s access to the newest and the most sustainable technology in the market with mid-term upgrade options in leases.
Benefits for dealers:
- More repeat business: Drive more sales with repeat business coming from the same customer over time.
- Higher customer loyalty: Enjoy more customer loyalty with longer business associations and drive more repeat business.
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Predictable deal pipeline: Be assured of more deals with upgrades and renewals coming your way with flexible leasing plans.
- Better customer experience: Offer unforgettable customer experiences with flexible financing options that make the process of acquiring equipment easy for your customers.
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Commercial vehicle financing: Choosing the Right Financing Partner
While most financing partners In Australia may offer one or a few solutions, a strong total financing partner is hard to come by. Therefore, businesses choose DLL, which not only has the capacity to offer a total financing solution but also tailored solutions aligning with the changing needs of commercial vehicle financing.
If you are in the process of choosing a financing partner to support your business, look no further because DLL brings along the following advantages. Moreover, we are the preferred finance partner to 40 manufacturers and their dealer networks throughout Australia and New Zealand.
- Global presence with local expertise - Leverage the industry expertise of DLL in navigating international markets with localised insight. Our presence in over 25 countries globally has helped us become global in nature while keeping us local at heart!
- Dedicated support team for growth - A dedicated team to address support, service enquiries, responsiveness sales, dedicated account manager means more collaboration at ground level and delivering success together.
- Scalable solutions tailored to your needs - The DLL range of offerings has several options that can be tailored to your business’ requirements to foster flexibility in financing options aligned with business growth.
- Strong backing - Being a wholly-owned subsidiary of Rabobank ensures financial stability and a strong market credibility of DLL in the financing space.
- Industry expertise - Your financing partner should be able to guide you in your space with market and industry expertise that may affect your business. With DLL’s decades worth of experience in the transportation space globally, you can rely on strong market experience through this partnership down the road.
Conclusion
A comprehensive approach to commercial vehicle financing is vital for Australia's transportation sector to offer tailored solutions at every touchpoint on the supply chain. DLL offers diverse options, including floorplan finance, leases, loans, and special solutions, which makes a choice of financing solutions available to OEMs, dealers as well as businesses.
Choosing DLL means gaining a global partner who can be your side for the road ahead with a dedicated support team, scalable solutions, financial stability, and industry expertise.
With DLL, businesses have a reliable ally in navigating the challenges of commercial vehicle financing at every turn in Australia.
