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Curtailments: The Cash Call Hidden Inside Aged Stock

A dealership can report an acceptable gross margin and still feel unexpected cash pressure. One reason is that inventory funding does not always behave like a simple interest-only facility. Depending on the floorplan agreement, ageing stock can trigger principal reductions, curtailments or other cash requirements. The accounting result may not immediately look worse, but the bank account does. That makes curtailment risk a working-capital issue long before it becomes a profit-and-loss issue....