Page 35 - GIADA Nov-Dec 2020

FINANCE

Capital, Capital, Capital (Part 1)

By Bill Ward, President/CEO of Sterling Credit Corp.

credit. These sales positioned me with peace of mind as well as lowering your stress
a cash flow that allowed me to fund my levels. A car dealer once told me “carrying
operation and maintain a level portfolio. debt is like running on a soccer ball, it’s not a
matter of you falling off, just when.”
I exited the dealership business because
I saw value in creating a capital source Capital or lack of capital is the most
partnership with auto dealerships and important part of any plan to go forward.
finance companies. There is a true need for There are many other challenges we will
dealers to expand their working capital and all face to recover back to pre-pandemic
have inventory paid for or a larger receivable levels. It will take time and patience and the
As the pandemic clears, probably the base so that their cash flow becomes their willingness to sacrifice immediate needs for
biggest concern for automobile dealers operating cash. The more cash I used to put long term gains. My personal opinion is I
and finance companies is what does the into my business, the larger the receivables have never seen an environment that can
future hold regarding capital. Do I have and in turn the larger the cash flow. With be so beneficial to those that manage their
sufficient capital on hand or do I have the high cost of some credit facilities this operation well. n
additional capital available or a plan to method should be pursued in order to
obtain additional capital? After many years balance expenses and portfolios. Bill Ward is President/CEO of Sterling Credit
in the automobile business, I have found Corp. a bulk receivable purchase company.
working capital to be the reoccurring issue As you decide to grow past your original He has survived four decades in the consumer
that has to be dealt with before taking any goals, applying this same method will allow lending, auto lending, floorplanning and
other steps. you to own more of your receivables and keep loan servicing industry. See ad on page 6.

Your capital needs will dictate your
ability to survive. The first step is to
evaluate your immediate capital needs for
operating expenses, inventory needed to
be competitive and your ability to purchase The GPS REVO-lution is here.
additional receivables if you are a finance
company. It’s important to set a game plan
that will be conservative and mitigate
the risk to your cash flow. You should set
reasonable expectations not to be exceeded
even if things seem to be going well at
that moment. Most car dealer’s needs are
floor-planning loans and warehousing or
receivable lines of credit.
The Industry Approach REVO-LUTIONARY Approach
Let’s assume you are financing your sales as
a captive; you are going to want to use your
availability of cash to fund your inventory Introducing REVO
and receivables. In the 90’s, I used all the A Completely Wire-Free Tracking Device
available cash and credit I had to reach a
maximum receivable base that I would then No plugging-in or hardwire installation necessary.
sell off in batches to pay down either the Just activate, place and go.
line of credit or my floor-planner. However,
I rarely increased the amount that I sold Get the wire-free GPS tracking device you can put just about anywhere!
so therefore I was able to age my portfolio. Call 1-800-553-7031 or visit AdvantageGPS.com/Revo
In between selling off receivables my
monthly cash flow would improve allowing
me to gain more receivables or purchase
inventory unencumbered. I continued
to sell receivables to pay down my line of

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