It’s easy to understand why the popularity of consumer financing has exploded in recent years—the flexibility it offers customers to pay for the services/products over time rather than upfront. For example, instead of a $500 upfront cost, financing allows you to pay for your new sofa in manageable $100 monthly installments.
What Is Customer Financing?
Ever want to buy something but the price tag is a bit much upfront? Customer financing lets you do just that! It’s like a payment plan offered by businesses that allow you to spread out the cost of your purchase over a set time, usually a few months to two years or even more. This makes bigger purchases feel more manageable for your wallet.
Consumer Financing – Key Advantages For Businesses and Customers
Offering financing options helps businesses stand out from competitors and boosts the chances of customers buying from them. By giving customers the choice to finance their purchases, businesses build a reputation for being supportive and welcoming to everyone, no matter their financial background.
| Millions Rely On Personal Loans! A LendingTree study reveals nearly 23.5 million Americans have a personal loan. |
Benefits of Customer Financing to Businesses
1. More Sales, More Profits!
By offering payment plans to customers, businesses reduce the chances of abandoned carts. When customers are given options to pay via flexible financing, chances are they will complete their purchase which translates into more sales for businesses.
2. Enhanced Customer Loyalty
When a customer is sure that a business is offering them the flexibility to pay over time, it boosts customer loyalty, which in turn translates to increased ROI for the business.
3. Maximize Revenue with Every Transaction
When customers are presented with financing options early in their purchase, it gives them the confidence that they can afford the big-ticket items they want. Thus, they’ll be more serious about the purchase eventually leading to increased average order value (AOV) for business.
4. Strengthened Cash Flow
Offering flexibility in financing options allows businesses to keep a steady cash flow and keep the inventory moving.
5. Expand Customer Base
Customers who do not have enough funds to make purchases, restrict themselves to buying even the relevant products. But, when they know they have flexibility in making purchases, businesses can appeal to more customers, including those who may not have the funds to make immediate purchases. This broader customer reach can result in increased sales and contribute to business growth.
| Why Should Businesses Offer Consumer Financing? ▶️It helps close more deals ▶️Outperform the competition ▶️Increases sales and ROI |
Benefits of Financing to Customers
1. Tailored Financing Options for Every Need
When customers are presented with flexibility in payment options, they can choose from the repayment period that best fits their financial terms. The longer the repayment period, the lower the monthly payouts. In case, the consumers wish to pay the loan amount early, they can opt for a shorter payout period.
2. Access to Premium Products and Services
With consumer financing options readily available, you don’t have to wait long to reap its benefits. So, if you are delaying your weight loss surgery because you didn’t qualify for a traditional loan, opt for consumer financing and get the procedure done.
3. Simple Application Process
Applying for consumer financing is much more easy than traditional financing. The process won’t take long as it involves an easy application process. During checkout, when customers request financing, they are presented with various credit options and competitive rates with the flexibility to pay back in 6 weeks to 24 months (depending on the purchase). This point-of-sale credit solution doesn’t require filling out lengthy forms.
A Customer Success Story With Denefits
“Denefits has been a game-changer for our plumbing business! We recently had a customer facing a major leak, but the upfront cost of repairs seemed daunting. Thanks to Denefits’ flexible monthly payment options, we were able to offer a financing plan that fit their budget. They were thrilled to have a solution and get the leak fixed right away. Now, they have peace of mind, and we secured a loyal customer who appreciates the financial flexibility Denefits provides. It’s a win-win for everyone!”
How To Offer Financing To My Customers?
To offer financing to your customers, you can choose between In-House Financing and Third-Party Customer Financing. Here are the details:
| ➡️ In-House Financing: Imagine your business becoming the bank! With in-house financing, you skip the middleman and offer your financing plans to customers, building loyalty and keeping the interest profits earned.
➡️Third-Party Financing: Don’t want to be the banker? No sweat! Third-party financing lets you team up with financing partners. They’ll handle the nitty-gritty of approvals and collections, while you focus on making sales. |
➡️ In-House Financing For Customers
In this type of financing, you do the credit checks and manage the entire payment collection process on your own. This approach requires more operational staff that undertake various tasks and accomplish them. It is best suited for businesses with a large workforce that can manage the processes in-house.
With this plan, the hassle and legalities are owned by the business (that is you). A business gets in touch with the customer, makes calls, and sends reminders.
➡️ Third-Party Customer Financing
This type of financing involves a finance provider, loaning the amount to a customer to facilitate easy purchasing. The finance provider either lends the funds to the customer or covers the payment for them. Unlike in-house financing, where the business manages the entire process, third-party financing shifts the responsibility to the external provider.
A Comparison Of Customer Financing Options: In-House vs. Third-Party
| Feature | In-House Financing | Third-Party Financing |
|---|---|---|
| Control over the approval process | You control the approval criteria | Third-party sets approval criteria |
| Profit on interest | You keep the interest earned (if applicable) | No profit on interest |
| Customer data ownership | Businesses own customer data from financing applications | Customer data belongs to the third-party |
| Integration with your business | Requires integration with your sales process | Easier integration, often with pre-built solutions |
| Approval speed | Can be faster, especially for smaller amounts | May take longer due to third-party verification |
| Expertise required | Requires knowledge of financing regulations | Less expertise is needed, as the third party handles compliance |
| Potential upfront costs | May require investment in technology or staff | Typically no upfront costs |
| Risk of bad debt | You bear the risk of customer default | Third-party assumes the risk of customer default (may come with fees) |
More Options For Financing Customers
Businesses exploring ways to support customer financing can consider several alternative options. Here are some additional avenues to improve customer financing solutions:
◾Payment Plans
Nearly 54% of Americans are more likely to shop at a retailer that provides flexible payment options. The payment plan can range from 30 days to a few months or more depending on the value of the purchased item.
◾Coupons & Discounts
By offering coupons and discounts, you incentivize purchases and coupons and discounts act as a motivator for customers to make purchases and entice them with a lower price tag.
◾Credit Cards
Accepting credit cards lets you get paid right away and allows customers to pay over time. You can also add convenience fees to cover your processing charges.
Denefits Can Help You Finance More Customers
| 100,000+ Users | 95% Approval rate | 70+Industries supported |
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Denefits offers a range of flexible financing options that remove that initial barrier, allowing your customers to spread the cost of their purchase over time. This win-win solution increases your sales potential by making your products or services more accessible, while also fostering customer satisfaction and loyalty – they get the solution they need now, and the flexibility to pay comfortably.
Why We Stand Out?
1. Multiple Financing Options
Denefits offers payment plans that allow individuals to pay for services through flexibly, eliminating the need for a large upfront payment.
2. No Credit Checks
This policy broadens financing options for those with poor credit, enabling businesses to reach more customers.
3. Payment Protection
Our payment protection ensures you’re covered in case of unexpected financial difficulties.
Conclusion
Customer financing is a powerful tool for businesses aiming to enhance sales, customer loyalty, and overall market competitiveness. By providing flexible payment options, businesses not only remove barriers to purchase but also foster a more inclusive shopping experience that caters to a diverse customer base.
Denefits makes this process straightforward and effective, offering a wide range of financing solutions without the need for credit checks and ensuring high approval rates. This approach not only helps attract and retain more customers but also supports stronger cash flow and higher average order values.
Whether opting for in-house or third-party financing, the key is to integrate a system that aligns with your business goals and customer needs. With Denefits, businesses can confidently offer financing that benefits both the customer and the bottom line. So, take the step towards more accessible, customer-friendly financing options today, and watch your business thrive with increased sales and loyal clientele.
Frequently Asked Questions
1. How Easy Is It To Set Up Customer Financing With Denefits?
Setting up customer financing with Denefits is straightforward. You can choose from the various types of payment plans you want to create for your customers. Denefits offers instant approvals for 95% of applicants and operates with a NO CREDIT CHECK policy, making financing accessible to a broader customer base.
2. Are Any Financing Options Available For Customers With No Credit And Low Credit?
Yes, Denefits provides financing options for customers with no credit or low credit.
3. What Are The Different Types Of Consumer Financing Available For Merchants?
There are two main types of customer financing for merchants, in-house financing and third-party financing solutions. In-house financing means the business directly provides payment plans or credit options. Third-party financing involves partnering with external providers to offer credit solutions.
4. How Does Small Business Financing For Customers Work, And What Options Are Available For My Business?
Small business financing for customers allows them to pay for your products or services over time, making purchases more manageable. This can be done through In-House Financing or Third-Party Customer Financing. With in-house financing, you directly handle credit checks, approve loans, and collect payments, giving you full control. Alternatively, third-party financing involves partnering with an external provider who manages the entire process, from credit approval to payment collection, reducing your operational burden and risk.
5. Is Financing For Customers Worth It?
Yes, customer financing is worth it, especially with Denefits. It makes the process easy and hassle-free. Here’s how it benefits your business:
1. Helps build trust and loyalty with customers.
2. Customers who use financing are more likely to return for future purchases.
3. Creates ongoing revenue streams as customers make regular payments.
4. Boosts overall sales and leads to a higher return on investment by allowing customers to buy more.
5. Makes your products or services accessible to more people, including those with limited immediate funds.
6. Is Financing For Customers the Right Choice For My Business?
If you offer high-ticket items costing $500 and upwards and have services/products you want to upsell, you should offer consumer financing.
The post Customer Financing: A Guide On How To Offer Financing To Customers first appeared on Denefits.
