Consumer Financing: Why Your Small Business Should Offer Financing Options
If you keep a close eye on business trends, you may have noticed that many companies have recently jumped on the consumer financing bandwagon. These programs allow businesses to partner with financing companies to offer credit lines to customers. Many business owners, however, wonder what value these programs add.
For starters, consumer financing provides access to more potential buyers. Customers who could not otherwise afford your products can pay smaller amounts through financing agreements. This makes the final purchase price seem more affordable by spreading it out over time, while you see the same profits in the long run. Even shoppers with poor credit are typically eligible for consumer financing, offering businesses a much deeper customer pool.
Consumer financing programs are straightforward and inexpensive to set up; most plans are free to your business, requiring only your agreement to opt-in. There are no upfront costs and no fees for participation. The value to the financing company lies in access to your patrons and interest payments on the purchase, so it is in their best interest to make sure the process flows smoothly effortlessly on your end.
When it comes to dealing with the details, your partner will take care of all the heavy lifting. They handle every aspect of the financing agreement, customer follow-up, and, if necessary, collections and repossessions. All of this activity will take place “behind the scenes,” allowing you to focus on your enterprise. They generally guarantee you the full amount of the sale within a couple of days of the customer signing the agreement.
For retailers who specialize in items with hefty price tags, customer financing can bring in new business. For shoppers who lack access to credit, have less disposable income, or who may be wary of making a significant dent in their bank account, these plans can incentivize them to shop with your business by making large purchases more affordable.