For: equipment distributors, dealership owners and finance managers
The decision: Can the business meet the inventory facility’s obligations if machines sell later than planned?
60-second answer: Map each financed unit to its balance, due dates, curtailments and realistic sale proceeds. Stress-test delayed sales before adding stock. Use your executed agreement; lender terms vary and an automotive lending example is not a fitness-equipment rate card.
Read the agreement before modeling the order
The OCC’s Floor Plan Lending handbook describes inventory financing and curtailments: scheduled principal reductions that can apply when inventory remains unsold. It also discusses collateral monitoring. Its examples span industries and should not be treated as universal advance percentages or inspection schedules for fitness equipment.
Pull the signed agreement, current lender statement and inventory register. Identify the eligible collateral, advance basis, interest calculation, fees, sale-remittance obligations, reporting requirements and treatment of demonstrations, returns or discontinued models. Have unresolved financial or legal terms reviewed by your lender and advisers.
| For each unit | Record from your agreement and ledger | Why it matters |
|---|---|---|
| Identification | Serial, model, location and condition | Reconcile actual collateral. |
| Funding | Advance date, funded amount and outstanding principal | Start from the real debt balance. |
| Cash dates | Interest, fees, curtailments and maturity | See obligations before a sale occurs. |
| Status changes | Demo use, transfer, return, damage or revision | Determine reporting and consent requirements. |
| Sale | Expected proceeds, selling costs and required lender remittance | Estimate cash remaining after obligations. |
| Delayed-sale case | Revised sale date and carrying costs | Identify the cash gap before placing another order. |
Separate cost from cash required
Interest and applicable fees are financing costs. A principal curtailment reduces debt and consumes cash; it is not another equipment expense to add on top of the purchase cost. Keep a profitability view and a cash calendar side by side so the same principal is not counted twice.
For an illustrative planning exercise, move a forecast sale into a later month and recalculate the actual interest, contractual principal payments and operating cash required before collection. Use the facility’s interest basis and dates. Do not assume a fixed monthly percentage or a standard 180-day trigger.
Set an exit decision before the payment date
Compare a normal sale, approved demo placement, transfer or clearance using realistic proceeds and costs. Check lender consent and remittance requirements before moving or selling collateral. A larger line does not itself fix slow stock; the review must connect forecast demand with repayment obligations.
- Who must be notified when a financed unit becomes a demo?
- How quickly must sale proceeds be remitted?
- What happens to eligibility when a model is returned or discontinued?
- Which inventory records and access does the lender require?
- What happens if borrowing availability changes?
Make the exception list a management routine
Flag mismatched serials, past-due obligations, forecast cash gaps and stock with no credible sale plan. Assign each exception an owner and resolution date. Review more frequently when sales, delivery or funding conditions change. Choose the cadence from the agreement and business risk rather than importing a schedule from another industry.
What to do this week
- Reconcile funded units with the lender statement.
- Build the next cash-obligation calendar.
- Run delayed-sale cases on the oldest or largest positions.
- Resolve one exit plan before committing to replacement stock.
Use the stocking decision guide alongside this FEX planning worksheet.
Editorial update — October 7, 2026: Automotive floor-plan financing figures have been removed from this equipment-dealer framework. The worksheet now uses the reader’s own facility agreement and inventory records.
