Fill up your forecourt without emptying your wallet

May 2007

Even after heightened awareness around the importance of stock funding, leading motor finance provider, Bank of Scotland Dealer Finance suggests that dealers could do more to structure their finances correctly.

The industry is very dynamic, with the pleasing rise of new car sales this Spring and margins remaining tight, dealers are being pushed to use cash to buy stock. Cash Liquidity is affected when dealers do not make the best use of their cash leaving capital tied up on the forecourt, resulting in cashflow stress.

Bank of Scotland Dealer Finance works closely with dealers to ensure they are borrowing in the most appropriate and cost effective way. They have access to specific stock funding facilities which can leave overdrafts free for dealers' daily cashflow requirements.

Bank of Scotland Dealer Finance Senior Director Paul McGill says: "Cash is king and cash management is key to success in this industry. At Bank of Scotland Dealer Finance we will provide funding for used stock, part exchanges, demonstrators, courtesy cars and hire vehicles, lending between 80 and 100 per cent of the stock value, whereas banks traditionally might only lend between 15 and 20 per cent.

"These arrangements could increase the cash available to the business significantly, based on the value of the stock. What is more, charges on a stock funding facility could work out cheaper than those on an overdraft. Making this exercise cost effective, as well as becoming a long term generator of income.

"The best time to borrow money is when you don't need it - planning when cashflow is good can help eliminate problems further down the line."

Notes to editors

Bank of Scotland Dealer Finance is committed to supporting UK dealerships with a comprehensive support package that includes point of sale consumer finance and insurance products, bespoke training, dedicated field personnel, database management, dealer stocking facilities and marketing expertise.

It funds around 500,000 vehicles in the UK and has successful business relationships with more than 3,000 dealerships, providing some £300million of stock funding to supporting dealers.