Did you know businesses may lose many customers due to unaffordability issues or complicated payment processes?
Retaining customers is just as important as gaining new ones. People want easy solutions. Getting a loan or easy customer financing options for a service should be a smooth process.
Customer financing can simplify the process for consumers and make their experience with you one to remember.
What is Customer Financing?
As the name suggests, customer financing allows customers to purchase without paying the total amount upfront. The merchant will receive the full payment from a financing company and provide the customer with the product or service. Depending on the company, the customer will pay the financing company back in installments, possibly with an interest charge. The merchant may also have to pay a small fee per transaction to the company.
Depending on your business type, you may want to consider offering customer financing. Do you offer services or products most people need to arrange money for or affordable ones people readily have available cash for?
Customer financing allows you to offer your clients payment plans so they can afford your product/service in the present.
Why Should You Offer Customer Financing?
Your company could lose out on potential customers due to a lack of financing. When you don’t offer flexible payment options, customers start looking elsewhere. You could retain clients by meeting them halfway. Knowing the flexibility your company offers and the convenience you provide will have clients coming back.
You will also become a more affordable brand for a whole new audience. Some people may avoid your product or service altogether because they don’t have the funds to afford it on the spot. With customer financing, you’re giving them the option to buy now and pay later. Some clients may only afford your products or services by making gradual payments since saving for it may take much longer.
How to Offer Customer Financing?
Whether you own a small or large business, customer financing will benefit you. Offering finance to your customers will help you gain and retain new clients. You’ll be able to turn browsers into buyers much more quickly.
If you want to offer customer financing and learn how to do it, we’ve got you! We’ll be discussing how to go about the process and the pros and cons.
Imagine paying for a product little by little instead of having to fish out all the money on the spot. That’s the concept of financing. If your customer buys a $500 couch from your company but chooses to finance it, they can split the payment into five. This allows your customer to pay for the purchase in installments equalling $100 each. The customer will leave with the couch on day one, but they must make each payment with a small interest charge. Not only does it benefit the customer but also your business in multiple ways.
In this case, if you want to get the most out of it, partnering up with a financing company will help. You can save time and money by getting your customers to finance your products through a payment processing company.
For example, Denefits is an excellent platform that many businesses use to offer financing to their customers. The benefits you’ll experience are that your company will receive the total payment upfront. You don’t have to wait for the customer to pay their installments because Denefits lifts that stress off your shoulders. The installments are made to Denefits, and it’s their responsibility to follow up with any customer who misses or makes a late payment.
Another benefit is that Denefits offers guaranteed customer financing. Even if your customer misses a payment, your company will get paid. Flexible payment plans are a great way to convince people to choose your business. Denefits offers flexibility when working with your customers. They can select payment plan options and make a down payment so that they have the opportunity to control their monthly installments. This gives them more power over their money which your customers will appreciate.
If there are any customer service issues regarding the financing, Denefits takes it upon themselves to resolve them. Their main priority is to value your customers and provide them with the best care possible. You can avoid dealing with demanding customers or any other discrepancies.
Let’s go further into how exactly you should offer customer financing:
- Your customer will see a product or service they want to purchase either in-store or online.
- You make it known to your customers that you offer to finance your products/services. Your customer will then apply either online or at your store. The first step for most payment processing companies is to run a credit check. Denefits, on the other hand, do not run credit checks on customers applying for financing – guaranteed approvals for all.
- Quickly, your customer will get approval.
- If the customer decides to move forward, you will receive the full payment for the product or service on the spot from the payment processing company.
- The company will provide your customer with a payment plan outlining the length and the payment schedule.
- The customer will have to pay a small interest rate on top of their monthly installments. You may also have to pay a small processing fee.
The steps to offering customer financing are relatively simple. It’s all about how you promote this service to your customers. Make it well known to your clientele that customer financing is available to boost their purchasing power.
What are the Cons of Customer Financing?
Potential for the bad debt – Regardless of a credit check, you may never truly know if a customer will follow through with their payments. It can be risky to give up an entire product or service on the spot without receiving the total amount for it.
Extra accounts receivable – If you decide to do in-house financing, you’ll experience multiple new accounts. It’ll require you to hire additional employees, which will cost you more money. Hiring a company to handle your financing will allow you to focus on running other aspects of the business without hiring more people.
What are the Pros of Customer Financing?
Increased sales – More people will begin to purchase from your company, given that they won’t have to pay for it upfront. This makes your business more affordable for many people, and you’ll experience an increase in sales.
New customers – When you offer financing as a business, people who usually ignore your products or services will begin to consider them. You’ll be attracting customers that would have never purchased from you otherwise. Now that they can work with a payment plan, picking your company over others.
Upfront payments – Luckily for you, the payment processing company will cover on behalf of the client, and you’ll receive the total amount for your product or service on the spot. You won’t have to worry about your cash flow slowing, regardless of whether the client makes their installments.
In most cases, customer financing will help any business. You’ll attract new and potential clients, making things more affordable for a larger audience. Of course, no one wants to see lots of money leave their bank account. So those who even have the cash for your product/service might choose to finance because it creates a temporary illusion of not paying a significant amount.
If you want to incorporate easy customer financing options into your business, you can try Denefits. The complete payment processing software helps companies retain customers and attract new ones. The unique features that Denefits offers are flexible so that each client experiences satisfaction.