Inventory Theft and Out-of-Trust Situations in Floorplan Reconciliation
Definition
Dealers sell floored inventory without repaying the lender (out-of-trust), leading to missing units during inspections and potential theft or unauthorized usage. Repeated discrepancies in reconciliations between inventory lists, general ledger, and lender records enable fraud. This results in systemic losses from unrecovered advances on missing collateral.[1][2]
Key Findings
- Financial Impact: $Unknown - high potential for lost inventory value
- Frequency: Recurring during inspections
- Root Cause: Incomplete inventory reconciliations and failure to promptly investigate discrepancies or missing units
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Wholesale Appliances, Electrical, and Electronics.
Affected Stakeholders
Dealership Sales Staff, Inventory Managers, Lenders/Inspectors
Deep Analysis (Premium)
Financial Impact
$100,000 - $500,000 annually from systemic out-of-trust sales, compounding interest charges, and lender hold on future advances until reconciliation is complete • $20K-$100K per inspection in unrecovered advances on missing collateral • $30,000 - $120,000 annually from warranty holds not being properly documented as inventory adjustments, inflating apparent missing inventory and triggering false fraud investigations
Current Workarounds
Combination of QuickBooks inventory tracking, WhatsApp group messages between warehouse and sales, manual phone reconciliation with lender's inspector • Excel spreadsheets maintained separately from accounting system; phone calls to sales team and warehouse; manual variance investigations; handwritten notes on inventory sheets • Field rep calls warehouse or dealer principal; unit release verbally confirmed; accounting team attempts to match sales to floorplan payoff list after the fact
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
Excessive Floorplan Interest from Delayed Reconciliations
Loss of Floorplan Funding and Bankruptcy from Reconciliation Violations
Idle Funding Capacity from Unreconciled Floorplan Deficits
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