How do I review a boat dealer’s floor-plan stock and unsold boat inventory?
Start with a list of every boat on the lot and match it to the lender’s floor-plan statement. Each unit should show who owns it, how long it has sat and what is owed against it. Walk the yard and read the serial numbers yourself. Any boat that does not match the paperwork needs an explanation before you go further.
Ask for the floor-plan statement from the most recent month-end and the one from the same point last season. Compare the two. Units that appear on both have been sitting, and sitting is where the carrying cost builds up. Ask what the dealer does with older boats: discount them, move them to another location or ask the lender for more time.
Then look at the mix. A lot full of one brand or one size can be hard to move if buyers’ tastes shift. Ask which boats were ordered by the dealer on speculation and which were sold before they arrived. Check whether any boats are held on consignment, since those belong to someone else and should not count as the dealer’s stock.
Finally, ask how the lender treats the arrangement if ownership changes. Many lenders review the dealer again at that point. Your lawyer can tell you what happens to the existing agreement, and your accountant can tell you how unsold stock shows up in the books. Ask, too, how the dealer plans for the off-season, when boats sit and interest keeps running. Request the lender’s audit reports, which show how often someone checked the lot and whether they found anything missing. Those reports tell you how seriously the dealer treats the arrangement.
Key takeaways
- Match every boat on the lot to the lender’s statement and to its serial number.
- Look for units that appear on statements from different seasons.
- Separate consignment boats from stock the dealer actually owns.
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Financing
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentInventory financing: What it is and how it works
- 02Business Development Bank of CanadaGovernmentWhat is inventory
- 03Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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