Dealers need to keep an eye on their finances and source the most appropriate form of funding to purchase stock, warns Capital Bank Motor.

It believes that a significant number of dealers use unsuitable facilities to purchase used cars, which puts pressure on cashflow.

“Often we find that dealers are using their overdraft to purchase used cars,” says Paul McGill, director at Capital Bank Motor. “When sales and profits are tight this can create problems, particularly when specific stock funding facilities for just this purpose are available.”

McGill advises dealers to leave any overdraft facility free for daily cashflow.

“This arrangement can increase the cash available to the business significantly,” adds McGill.