If you are a shop owner and waiting for the customer to pay is causing an issue for cash flow, then in-house financing could be the right solution. This way, you do not have to worry about the ‘financing for my customers‘ thing. It is available at many big stores. If you work with a third-party financing company, you can also set up a program where customers can pay later or buy them. This type of arrangement can boost up sales, customer retention, and make the cash flow great.
Offer financing for my customers
If you are thinking of offering your customers financing online purchases, you may also imagine that your business can be extended directly with the credit. In other words, you can provide your customers with a service or product with the promise that they will pay you later, even if you are providing it online.
This arrangement can get a little bit complicated, and it will not fix up your cash flow issues if you are waiting for customers to pay their bills. There are other alternatives as well, and it is quite common among small businesses like third-party financing. The companies offer a point of sale financing when your customer can borrow from these companies and your business get paid right then and there. You can benefit from making sales on credit and do not have to take up any kind of financial risk.
How to make a sale
When you sign up for your business with one of the financing companies, you will get an online and mobile program to process sales. Just as the customers make the purchase, they can apply for the payment delays through the system. This way, it becomes easier for the financing company to review their credit score to make an on-spot decision. If the customer qualifies for the payment, the financing company will pay for your business in full for the purchases. They will also be in charge of setting up the payment plan for customers and collecting funds in the future.
All you need to do is pay a nominal service fee, and it could be an amount of monthly charge or some percent of every sale you make, like processing credit cards.
Benefits of customer financing
When you provide in-house financing, it could make a significant difference, like a customer may complete the purchase then and there. Still, if you give third-party funding to customers, then there is a possibility that they may not return.
If the customer is not willing to spend all at once and you break down their payments in parts, it becomes easier for them to pay, which is how in-house financing helps.
But when we talk about third-party financing, it is sometimes a win-win for both business and customers. The reason is that the customers get space and time for their rest of part payments. You also do not have to wait for the cash. You will get paid in full, and the financing company will have to wait for the money collection and not your business.
Apart from all this, the hassle and amount of work needed to be done go to minimal. The financing company will review the customer’s credit information and will decide whether the customer qualifies for credit or not. Even if the company is financing online purchases, they will not risk some customer who doesn’t pay the bill on time or has less credit score.
More about customer financing
If you are still thinking about ‘How does it make sense to financing for my customers,’ you are not wrong. Many pros come along when you offer installment payments to the customers. It is sometimes not a perfect fit for small businesses. The financing companies often need a minimum amount of minimum transactions or sales. If your typical sale volume is too low, you may not be eligible to use the programs. Also, you may end up paying some extra fees to the financing organization.
Not all your customers will be qualified for financing, so you must be careful about presenting this program and always remember that acceptance is not still in the guarantee.
Impact of financing on cash flow
If you offer to finance your customers, it can be a long-term solution if you think of improving your cash flow. You can also generate more sales and get paid for it immediately by the third-party financing company.
If your businesses need cash, then there are also other options like short-term cash flow loans. If you start to make more sales from any new financing system, then you can pay off the debt right away. These loans do not charge any early payment penalty.
Whether you want to provide your customers with in-house financing or go with third-party funding, it is your decision. It would help if you always go with the option that comes out to be the best for you.