Sold out of trust (SOOT): what it is and the risk to your dealership

"Sold out of trust", SOOT for short, is the funder’s term for the situation every stocking agreement is written to prevent: a vehicle they have advanced money against is sold and delivered, and the advance is not repaid when it should be. The dealer has the customer’s money, or the finance company’s, and the funder still has a loan secured on a car that is now on someone’s drive.

The name matters because of how funders think about it. A stocking facility works on trust: the funder does not hold the keys or the V5, it holds the dealer’s promise to settle each unit within a set number of days of sale. A SOOT is a broken promise, and funders treat a pattern of them as exactly that.

How it happens without anyone meaning it to

Most SOOTs are not deliberate. The car goes out on a Friday afternoon and the settlement request is not sent. Sales admin invoices the customer but the process that tells accounts to settle the funder is a separate one, done from memory. A part-exchange is taken in, funded, sold again quickly and never registered with the funder in the first place. The person who used to do the settlements leaves and nobody picks it up for a fortnight.

None of that is dishonest. All of it looks identical to the funder, whose field auditor turns up with a list of funded VINs and cannot find three of them on site.

The other way it happens

Sometimes it is cash flow. A dealer under pressure sells a funded car, uses the proceeds to pay wages or the VAT, and settles the funder next week, then the week after. The gap grows. This is the version funders fear, and it is why they audit, why they use daily settlement windows, and why the stocking agreement usually gives them the right to demand immediate repayment of everything, not just the units concerned.

It is also the version that can move from a commercial dispute into something more serious, because selling an asset that is charged to a lender and keeping the proceeds can be treated as more than a late payment. A dealer in that position needs advice from a solicitor, not a blog post.

What it costs

In order of severity. Interest: the advance keeps accruing daily until it is settled, on a car you no longer own. Curtailment and penalty charges: most agreements add a fee when a unit passes its settlement window, on top of the interest. The audit finding: a SOOT found on a field audit is written up and the facility is reviewed. The facility itself: repeated SOOTs, or a single large one, can mean the limit is cut, the settlement window is shortened, personal guarantees are called for, or the facility is withdrawn. For a dealer whose stock is largely funded, losing the line is losing the business.

There is a reputational cost too. Funders talk to manufacturers, and manufacturers decide franchise renewals.

The controls that stop it

Settle from the delivery, not from memory. A car should not be able to leave without the settlement request being part of the paperwork, and someone should compare yesterday’s deliveries with the settlements sent, every morning. Five minutes.

Reconcile the funder statement to the stock list every month, unit by unit, not total to total. A statement line that matches a delivered car, or matches nothing, is a settlement to chase today. This is the control that catches whatever the daily one misses, and the one an auditor asks to see.

Reconcile the statement to the ledger as well, so the books agree with the funder and a settlement posted but never paid, or paid but never posted, shows up.

Count the site regularly, with photographs, so the physical position is known and evidenced before the funder’s auditor arrives rather than after.

Where Forecourt fits

The Manufacturer rec in Forecourt matches every line of the funder statement to the stock list and, if you upload it, to the creditor ledger. Vehicles the funder is still charging for that the stock list says have been delivered land in a bucket called sold, not settled, at the top of the page, with the total shown as your exposure. Each one can be noted (settled on such a date, in transit, disputed), the month signed off, and the CSV filed. Run monthly, it turns a SOOT from something an auditor finds into something you found first.