Every dealer with active floorplans periodically gets audited. A inventory audit is the process led by the floorplan company to ensure the dealership is compliant with the terms of their finance agreement. In other words, the audit is basically the lender’s way of making sure both parties are on the same page. During the audit, the floorplan company verifies that the dealership’s inventory and documentation match what has been submitted to it.
>> Read What is a floorplan audit? to learn more about the audit process.
Here are four things your dealership can do before and during your inventory audit to help the process go smoothly and quickly.
Manage inventory consistently between audits
This one is easy, because you’re already managing your inventory. To prepare for your upcoming audit, of the vehicles that are on your floorplan, know which ones are still on your lot, which have sold, and keep track of all of your floorplan payments, both cleared and in progress. Having a clear picture of what’s happening on your lot ensures that a minor issue doesn’t turn into something bigger.
One option is to run a “pre-audit” before the real deal. If you run into any challenges, you can resolve them during the “pre-audit” before the actual inventory audit begins.
Invest in the right tools
There are more tools and technology available than ever to help streamline inventory management for dealers. If you’re running your dealership on paper, or if your management system is outdated, it’s all too easy for unintentional errors to be made and overlooked. Investing in and leveraging a modern inventory management system helps ensure you have a constant, real-time line-of-sight into your inventory. It’s equally important that you’ve designated the right people on your team to manage the system — and that they have the training they need to effectively use it.
Communicate, communicate, communicate
Honest and consistent communication with your floorplan provider is essential at all times, and even more so during an inventory audit. If during your pre-audit — or at any time — you have questions or you’re finding discrepancies with your floorplanning documentation or your inventory, don’t hesitate to contact your floorplan relationship team so they can help you. During the audit process, be sure to communicate with the auditor if your team identifies any issues so you can work together to mitigate challenges and find solutions.
Name an “audit captain”
Designating someone on your team who’s in charge of liaising between your dealership, your floorplan company, and the auditors can help streamline the inventory auditing. A single point of contact at your dealership can drive accountability and ownership of the audit to ensure nothing falls through the cracks. Having an audit captain ensures your dealership is an active partner in the inventory audit process.
Audits are a regular part of floorplanning – and with the right tools, personnel, and preparation in place, your inventory audits can be more efficient so you can focus on running your dealership!
*Definitions may vary depending on the floorplan company. These term definitions are not specific to AFC’s contracts, but only general references.
Disclaimer: Descriptions of AFC floorplans are for illustrative purposes only. Terms of AFC floorplan financing are subject to a final written agreement acceptable with AFC. AFC does not guarantee any results for floorplan financing and examples are for illustrative purposes only. Dealers should consult their own advisors to make independent business decisions regarding floorplan financing. AFC is not affiliated with any of the companies mentioned in this article.