Should You Offer Consumer Financing on Your Own?

Many businesses find it beneficial to provide consumer financing for their customers. Business-to-business companies such as manufacturers and distributors routinely provide financing options to help their clients complete purchases. Retailers are increasingly getting involved in this trend as well, making it easier for customers to buy large-ticket items comfortably. Should you offer customer financing options, and if so, how?

The Importance of Consumer Financing

No question that providing financing options is good for both businesses and their customers. This applies to small retailers as much as large stores. Considering the wide range of products and pricing in today’s market, it’s common to have many items that are out of reach of a customer’s monthly budget. Financing programs can help clients overcome these obstacles.

By providing financing for your customers, you enable them to buy the things they want, not just the things they can afford at the moment. That way, you increase customer satisfaction and give your clients more freedom for purchases.

This can also have benefits for your company’s total revenue. When your clients have financing options available, they may subconsciously choose to purchase with less hesitation. Instead of worrying about being able to afford an expensive item, they focus more on the features it has and the benefits of buying it. Money becomes secondary instead of a primary focus.

The Risks of In-House Customer Financing

Some business owners may consider providing funding for their clients in-house, such as accounts with customer credit. There are some benefits to doing this, but for many businesses, the risks aren’t worth it. When you’re the one providing financing, you have to take on many responsibilities: performing credit checks on potential clients, handling payment collection, pursuing delinquent accounts, and potentially losing money if customers refuse to pay their bills. These situations can be a huge hassle for small business owners, especially because they take time away from other essential aspects of running your business.

The Consumer Financing Process With Outside Lenders

Third-party financing companies can help you avoid these risks and enjoy the benefits of financing your customers easily. When you choose outside financing, your clients can apply quickly for financing. As soon as they make the purchase, you receive the full amount of the item’s price, almost as if they bought it from you directly. The lender handles all financing and collection needs. The entire qualification process only takes a few minutes in most cases.