New floorplan financing tool combines, tracks data, Tamarack says
Floorplan rates range from 9% to 11%
Equipment finance software provider Tamarack Technology is looking to streamline floorplan financing at a time when the equipment lenders and dealers are facing high borrowing costs and excess dealer inventory.
Roughly 50% of agriculture equipment dealers reported excess new equipment inventory in the second quarter, according to heavy-equipment research firm IronAdvisor Insights. About 25% of truck dealers also said new inventory levels were above target in Q2.
Tamarack’s new software tool is designed to enhance visibility of dealer performance by providing customized reports that aggregate data from lease origination systems, accounting platforms and wholesale systems.
The DataConsole FloorPlan allows lenders, dealers and OEMs to track metrics including:
- How long inventory has been on a dealer’s balance sheet;
- Whether equipment is accruing interest;
- Turnover rates for specific equipment; and
- Credit utilization.
“Having an ability to track that on a more pattern basis historically, being able to segment the data into different groupings and look at it and isolate certain segments of their business, those things serve all the purposes for why this became sort of a burgeoning area for us,” Tamarack Director of Technology Services Tim Appleget told Equipment Finance News.
The product combines wholesale and retail data into a singular stream, addressing challenges such as “disparate data sources and non-integrated reporting” while better informing financing decisions, Tamarack President and Chief Technology Officer Scott Nelson told EFN.
Addressing the pain points
High floorplan rates are pressuring dealers to sell new equipment quickly, with some attempting more pre-sales to avoid the cost burden, Josh Gruett, general manager at Waupun, Wis.-based Waupun Equipment, previously told EFN.
“Floor plan rates are averaging around 9% to 11% depending on the vendor,” he said. “So, if you got that down to 6% to 9%, I think you’d see a little bit more conduciveness to stock.”
Closely monitoring conversion metrics can help speed up sales and alleviate challenges tied to lingering high interest rates, Nelson said.
“When you raise the base interest rates, the spread between the wholesale interest and the retail might shrink. When margins squeeze, speeding things up saves capital.”
— Scott Nelson, president, Tamarack Technology
“People are using these reports to watch the capital move in the form of the wholesale to the retail. You manage what you measure, and you improve what you manage,” he said.
Supply chain disruptions are also driving demand for floorplan efficiency as dealers look to improve “the timeliness of assets to the lot, getting it onto their books and getting it moved quickly off of their lot,” Appleget said.
Finding what works
As many dealers still grapple with excess inventory, providing detailed reports of equipment types with high or low turnover rates could yield more effective financing strategies for lenders and OEMs, Nelson said.
For example, some dealers have started “using this tool with some customization to report back upstream,” he said. “In one case, they’re reporting all the way back to the OEM. … So, it gives them the ability to maximize the [financing] programs that are being used with them.”
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