OP-ED: Moving People, Moving Money: Inventory Financing for Bus Dealers


Bus dealers and manufacturers often face two distinct challenges: For dealers – acquiring the assets they need to sell on their land. For manufacturers – helping their dealers find and secure flexible financing plans. Inventory financing, also known as off-plan financing or wholesale financing, can help this “people mover” industry meet both of these challenges effectively and efficiently.

Inventory financing is a form of asset-based lending in which the amount borrowed is determined by the value of the inventory. It is either a short-term loan or a line of credit and is based on a percentage of the inventory value. Wholesale finance lenders can advance rates at 100% of a dealer’s invoice amount for new inventory, which traditional loan agreements cannot match. There is generally no need for additional collateral since the inventory secures the loan. Here are four key ways bus dealers can benefit from the smart and strategic use of inventory financing.

  1. Buy inventory. To thrive and grow, dealerships need vehicles to sell. Simply put, inventory financing allows a dealership to make volume purchases, as this tactic can generate volume discounts. The pandemic has reinforced the importance of inventory planning, with many dealers looking to have more inventory than they otherwise would (when available). Inventory financing can help achieve this.
  2. Improve cash flow. Businesses are monitoring and preserving their cash flow in ways they may never have before. In a volatile economy, it may make sense to use the funds normally tied up in inventory for operating and capital expenditures – and to use the cash freed up through inventory financing for personnel and other necessary items. to the growth and maintenance of the business.
  3. Improved storage levels drive sales. When a manufacturer can help dealers acquire the inventory they need on terms that work for them, that dealer will be able to stock more units, which can lead to increased sales. A strong inventory financing structure will match a dealer’s cash flow to inventory turnover, which strengthens a dealer’s liquidity, allowing dealers to preserve cash flow for other needs.
  4. In partnership with your manufacturers. A well-structured inventory financing program benefits bus manufacturers and upfitters by paying them immediately after a dealer invoices. Many manufacturers will share this benefit with dealers in the form of free days or price reductions. The perfect structure creates a win for the manufacturer and the dealer.

More benefits of partnering with the right inventory finance company

With supply chain issues being a reality, the ability to partner with a reliable and stable inventory finance company is essential. Beyond the basic reasons outlined above, dealers can realize some additional benefits.

  1. When you need help financing ancillary equipment. It’s not just about the bus or the bus chassis. Your customers may need ramps, shelving, signage, refrigeration equipment, or other amenities. A good inventory finance company will be able to develop favorable programs for the entire bus.
  2. When you need speed. Getting quick credit decisions and fast-track financing can be difficult. An experienced inventory financing partner can get things done quickly, with some even offering same-day financing.
  3. When you need to finance used equipment. Not all inventory financing providers will do this, but those that do can be invaluable.

Making smart business moves in the people moving industry requires smart use of assets. Finding and working with an inventory financing provider who is a true partner can go a long way to improving a dealership’s cash flow, inventory position, and customer satisfaction.


Gary Furnas is vice president and general manager, inventory finance, a transportation finance division at Mitsubishi HC Capital America.


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