Why Your Floor Plan Statement Lies (And What to Track Instead)
Your monthly floor plan statement is a historical document, not a management tool. By the time you see it, you've already made every mistake it reports.
The Statement Problem
Mid-September, you review August's floor plan statement: $47,300 in interest charges.
Now what? August is over. Those charges are final. That money is gone.
The statement tells you:
- What you spent last month (too late to change)
- Which units carried into this month (but not their current status)
- Your average interest rate (irrelevant for daily decisions)
It doesn't tell you:
- Which units are destroying profit right now
- What you'll owe this month if nothing changes
- When aging units cross the profitability threshold
- How today's purchase decisions impact next month's statement
What Actually Matters
Skip the monthly autopsy. Track these leading indicators daily:
1. Current Daily Interest Burn Rate
What does your entire inventory cost per day right now?
150 units averaging $25,000 financed at 6.5% = $670/day in floor plan interest.
That's your daily burn rate. It should be the first number in your morning meeting.
Why it matters: If your daily burn rate is $670 and you're selling 6 units daily, you're paying $112 per sale in floor plan costs before you even calculate gross profit. That context changes how you evaluate deals.
2. Units Over 60 Days (Count and Cost)
These are your problem children. They're not just aging—they're actively destroying profitability.
Track two numbers:
- How many units over 60 days (quantity problem)
- Combined daily interest cost (dollar problem)
If you have 18 units over 60 days costing $247 daily in aggregate, that's $7,410 monthly in interest on inventory that's already proven hard to sell. This metric should trigger immediate action.
3. Projected Monthly Floor Plan Cost
Based on current inventory and burn rate, what will this month's statement show?
Current daily rate × days remaining in month + interest already accrued = projected monthly cost.
This is the number that matters. It's your forecast, not your history. Use the floor plan calculator to run this projection weekly.
4. Average Days to Sale (Trending)
Is your inventory aging faster or slower than last month?
If your average days-to-sale is trending from 48 to 54 to 61, your floor plan costs are accelerating even if your inventory count stays flat. The statement won't show this trend until it's already costing you thousands.
5. High-Cost Unit Watch List
Identify the 10-15 units generating the most daily interest. These are typically:
- High-dollar trucks and luxury vehicles
- Aged inventory regardless of price
- Specialty units with narrow buyer pools
A $65,000 truck at 6% costs $10.68/day. At 85 days, it's accumulated $908 in interest. That single unit costs more than your eight newest vehicles combined.
Track these units separately. They need different management than your mainstream inventory.
The Daily Dashboard
Replace monthly statement reviews with a daily dashboard:
FLOOR PLAN SNAPSHOT - October 15
Daily Burn Rate: $722
Units Over 60 Days: 16 units ($284/day)
Projected October Cost: $22,384
Avg Days to Sale: 52 (target: 45)
HIGH-COST UNITS:
2023 F-150 Platinum (VIN 4847) - 91 days - $12.40/day
2024 Expedition MAX (VIN 3392) - 76 days - $14.85/day
[etc...]
ACTION REQUIRED:
- 4 units hitting 60 days this week
- $4,100 total interest on over-60 inventory this week
This dashboard tells you what matters: where you are right now and what needs immediate attention.
The Metric That Changes Behavior
Most impactful metric to track: Interest as Percentage of Gross Profit.
For each sold unit, calculate: (Accumulated Floor Plan Interest ÷ Gross Profit) × 100
Examples:
- $2,800 gross profit, $180 interest = 6.4% (acceptable)
- $3,200 gross profit, $520 interest = 16.2% (concerning)
- $2,100 gross profit, $740 interest = 35.2% (disaster)
When this percentage exceeds 15%, floor plan costs are materially damaging profitability. Above 25%, you're working for the lender.
Track this for every deal. Average it monthly. Share it with your sales team. Nothing changes behavior faster than seeing that 30% of your gross profit went to interest because a unit sat too long.
Implementation
Week 1: Use the calculator to establish your baseline metrics.
Week 2: Build your daily dashboard (takes 10 minutes each morning).
Week 3: Share dashboard in daily meetings. Make floor plan cost visible to everyone.
Week 4: Implement action triggers (auto-price reduction at 45 days, wholesale evaluation at 65 days).
The Real ROI
Dealers tracking daily metrics instead of monthly statements reduce floor plan costs 20-30% within 90 days. Not through desperate liquidation—through informed daily decisions.
Your monthly statement will still arrive. But now it's confirmation of what you already knew, not a shocking revelation of money already lost.
Stop managing your floor plan retrospectively. Start managing it in real-time.
