Floor Planning


DEFINITION of 'Floor Planning'

A form of financing pertaining specifically to inventory. A lender will purchase the inventory from the borrower and as the inventory sells, the borrower will repay the debt. It is essential that the creditworthiness of both parties is established and that a procedure for if the inventory does not sell is in place before the lending takes place.

BREAKING DOWN 'Floor Planning'

This type of financing began in the automobile industry as the purchase price for vehicles was high and standard financing was hard to obtain. Its popularity spread to home appliances and finally to large-scale home electronics such as personal computers.

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    The raw materials, work-in-process goods and completely finished ...
  6. Financing

    The act of providing funds for business activities, making purchases ...
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  1. What are the generally accepted accounting principles for inventory reserves?

    As with most matters related to generally accepted accounting principles (GAAP), accountants assigned with the task of applying ... Read Full Answer >>
  2. What do people mean when they say debt is a relatively cheaper form of finance than ...

    In this case, the "cost" being referred to is the measurable cost of obtaining capital. With debt, this is the interest expense ... Read Full Answer >>
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    NetSpend offers overdraft protection that allows the account holder to make transactions or incur fees with amounts that ... Read Full Answer >>
  4. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  5. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
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    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>

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