Losses on a floorplan book build up between stock audits. A good audit plan shortens that gap, so you see a dealer going wrong before the loss lands. Here is how a floorplan or stocking finance funder can build one across its dealer book.
What is a stock audit?
A stock audit is a check that the vehicles a funder has financed are at the dealer, in the condition expected and still unsold. Also called a floor check, it compares the funder’s record of what it financed with what is actually on the dealer’s premises, one VIN at a time. Anything missing, sold or damaged becomes an exception for the credit team.
A basic stock audit procedure runs like this:
- Take the funded stock list from your system on the day of the check.
- Find each vehicle and confirm its VIN against the list.
- Record its condition, where it was found and, for used and demo vehicles, the mileage.
- Ask the dealer to explain any vehicle you can’t find, then check the explanation.
- Report the exceptions to credit and track each one until it’s closed.
It isn’t the same as a dealer’s stock take. A funder’s audit looks only at funded vehicles and whether its money is still covered.
Risk-rate your dealers before you set a schedule
One fixed schedule for every dealer wastes visits on the safe ones and under-checks the risky ones. Turn your credit policy into a rule for each dealer: how often, how deep and who checks.
Signals worth scoring:
- the dealer’s credit grade, and whether management accounts arrive late or incomplete
- the size of the facility against the dealer’s net worth
- repayment terms: pay-as-sold lines carry more risk than scheduled repayments
- history of sold-not-settled vehicles, slow settlement or vehicles that are often “away”
- aged stock and vehicles close to a curtailment date
- change: a new owner, a new site or a sudden jump in drawdowns
- silence: a dealer that misses or delays a requested check. Treat that as a risk signal, not an admin issue.
Then link each rating to a schedule, for example:
| Dealer rating | Example frequency | Example approach |
|---|---|---|
| Low risk | Quarterly field audit, with a focused check in between | Full audit at the visit, focused checks between visits |
| Medium risk | Monthly | Alternate full and focused audits |
| High risk or watch list | Weekly, or whenever a warning sign appears | Focused and unannounced |
Once or twice a year isn’t enough for a floorplan book, because vehicles get sold and not settled between the snapshots. US bank supervisors expect floor plan checks at least quarterly, and more often (such as monthly) for pay-as-sold lines or dealers in weaker financial shape.
Focused stock audit or full stock audit?
A full stock audit covers every funded vehicle at every site, plus any documents you hold. It gives a complete reconciliation but takes longest, and a field auditor usually does it.
A focused stock audit checks a chosen subset, so it’s quick enough to run often and at short notice. Typical targets:
- vehicles past a set age, or close to curtailment
- high-value vehicles
- vehicles reported as away or sold at the last check
- new drawdowns since the last audit
- one site of a multi-site group, or a random sample
Unannounced or scheduled checks?
A scheduled check lets the dealer bring back demonstrators and cars from the body shop, so you can reconcile the whole facility at once. But notice gives a dealer time to cover a gap, for example by moving a car in from another site or settling a sold vehicle the day before.
An unannounced check shows the lot as it really is, with more vehicles away and more follow-up. Use both. On unannounced checks, give the dealer a short, fixed window, such as two days, to present anything that’s away. And watch for dealers that settle missing vehicles straight after an audit: they may have been using sale proceeds as working capital.
What to check on each vehicle
- Presence: is the vehicle on site?
- VIN: read it from the vehicle, not from paperwork or a key tag, and match it to the funded record.
- Condition and mileage: note damage or missing parts. For used and demo vehicles, compare the mileage with what it was when funded.
- Sold not settled: if the dealer says a vehicle is sold, ask for the invoice and check that settlement falls within your terms. A sale outside those terms is selling out of trust.
- Location: is it on the registered site, at another of the dealer’s sites, or with a third party such as a body shop? Anything off an approved site needs a reason and proof.
Evidence that stands up later
A check sheet tells the credit team what someone wrote down. For each vehicle, keep:
- a photo of the vehicle and its VIN
- the GPS location where the photo was taken
- a timestamp, checked against the window you set
- who took it, and confirmation that it was taken live rather than uploaded from a camera roll or shot from a screen
CheckVentory Auditor records this for you. The funder starts each check and decides who does it: the dealer, its own team or a third-party auditor. Every funded vehicle is recorded with a live, geo-tagged, time-stamped photo, and each VIN is matched to the funded book. Anything missing, sold or unexplained goes to your credit team, and so does a check that isn’t done on time. Auditor runs alongside your field audits rather than replacing them.
The stock audit report and following up exceptions
The stock audit report should make sense to someone who wasn’t there. Include:
- the dealer, site, date and time window, who did the check and whether it was announced
- funded vehicles on the book against vehicles confirmed
- each exception with its type, funded value, the dealer’s explanation and the evidence
- an owner, a deadline and an outcome for every exception
Sort exceptions by type: sold not settled, away with a reason, missing with no explanation, VIN mismatch and damage. Confirm each with a focused re-check rather than taking the explanation on trust, and escalate sold-not-settled vehicles under your facility terms. Our guide to tackling discrepancies after a floorplan audit covers this step in more detail.
Then feed the result back into the dealer’s risk rating. Clean audits can earn a lighter schedule; repeat exceptions move the dealer up a band.
Stock audit checklist
- Dealer risk rating is up to date
- Scope set: full or focused, announced or unannounced
- Funded stock list pulled on the day
- Every funded vehicle accounted for, with the VIN read from the vehicle
- Photo, location and time recorded for each vehicle
- Reason and proof for every vehicle that’s away
- Report filed, with an owner and deadline for each exception
- Sold-not-settled vehicles escalated and a re-check booked
Stock audit FAQ
How often should a funder audit dealer stock?
Base it on each dealer’s risk, not a fixed calendar. Once or twice a year leaves months in which a vehicle can be sold and not settled without anyone noticing. US bank supervisors expect floor plan checks at least quarterly, and more often for pay-as-sold lines.
What is a focused stock audit?
A check of a chosen subset of funded vehicles, such as aged stock, high-value vehicles, new drawdowns or vehicles flagged at the last audit. It’s faster than a full audit, so you can run it more often.
How do I prove my stock audits to auditors or investors?
Keep a record of each check: what was requested and when, who did it, the photo, location and time for every vehicle, and how each exception was closed. Records that can’t be edited after the fact, with corrections added as new entries, are the easiest to rely on.
Who carries out a stock audit?
The funder’s own staff, a third-party audit firm, or the dealer in a self-audit that the funder starts. Whoever does it, the funder oversees the work and owns the follow-up.
To see what a finished check looks like, view our sample audit record. It shows a dealer self-audit started without notice, two exceptions and how each was resolved. To walk through one built on your own dealer book, book a demo.