The Advantages of Consumer Financing for Businesses

Contractors and other businesses benefit greatly from providing financing options to consumers.

According to Bankrate, only four out of every ten Americans can afford to spend $1,000 all at once. That is about 39%.

Anything beyond that price point restricts you from reaching more than half of your potential market. Even if you have the best sales team in the world delivering the best solutions that will undoubtedly benefit the customer, it will not matter if the customer cannot afford it. You’re out of luck.

Customer Financing for Businesses

But if you can respond to the price concern with a simple and affordable customer financing program, you’re right back in the game, and chances are you’ll have a new customer.

If you offer a seamless and straightforward payment plan, 76% of customers are more likely to make a large purchase.

So, they can afford your products and services, but not in cash. Providing a customer financing option enables your consumers to spread out the payments, giving them the ability to make the purchase.

Consumer financing allows you to aid your customers in boosting their purchasing power. That is a big win for everyone.

Average Ticket Size Increases Because of Consumer Financing

When you provide financing to customers, your average order value (AOV) is likely to increase.

The order value is the overall value of a customer’s purchase, including all products and any add-ons.

When customers have the opportunity to finance their transactions, they may decide to order the more expensive or advanced versions of those products as well as add-ons.

Consumer Financing Increases Sales

According to research, new customer closing ratios range between 5% and 20%. Closing ratios grow to 60% to 70% for existing or repeat customers.

When you offer customer financing, you can convert more new leads into current customers and allow your existing customers to finance large purchases. They are aware of what to expect from you. And they know you can assist them with funding it.

Offering financing options and other financing solutions to your customers as a business owner can boost customer experience, loyalty, and cash flow.

On financed sales, you receive full payment upfront after the customer signs the financing agreement and approves the purchase. Your customers make manageable monthly payments to the finance provider.

Separate Yourself From the Competition

Customer finance has been proven to be a powerful differentiator in advertising. We’ve all seen car manufacturers and dealers set the standard for customer financing programs:

• “0% interest financing!”
• “Low down payment!”
• “Everyone Is Approved.”
• “Four equal payments made per month!”

They wouldn’t do it if it was not effective.

By offering financing to customers, you can stand out from the crowd, set yourself apart from the competition, and earn their trust.

 When you offer a financing plan to customers through a good third-party financing company, you can offer realistic and accessible payment plans to customers with a bad credit history as well as a variety of credit scores. You can offer financing in-house, level the playing field against larger competitors, and boost sales by partnering with a third-party provider platform like HelloRates.

By outsourcing your collections and accounts receivable departments to third-party providers and customer financing platforms, you get paid upfront, reduce your legal responsibilities and risks, and dramatically improve your company’s cash flow.

Suggestions for Increasing Consumer Financing Awareness

• Inform the customer that they are not required to use the services of a different lender because you already have a financing partner.
• Inform them that the application process is simple and that they can complete it online in just a few minutes.
• Tell them that the amount of the loan depends on their credit score but that there’s no limit, unlike with their credit card company.
• Include a privacy statement on your website. This will assure your customers that you value their privacy and will protect their credit information.
• Inform them that approval rates are better than with other kinds of lenders, especially bank lenders.