You know you need to offer your customers a way to pay over time for that product or service. You also know that offering in-store financing can be a hassle, uncertain, and expensive. In fact, most small businesses who have taken the bold step to offer in-store financing only come to find that it is only used as a last resort and with much hesitation. Why? Let me count the ways!

  1. Small businesses tend to have just a few staff working at any given date/time. This makes the time and effort involved with traditional lending products problematic.
  2. The training and understanding of how to process a sale using in-store financing tends to be lost on the retail sales associate, not to mention when turnover occurs, having to bring the new staff member up to speed on the financing program is less than desirable.
  3. Most small retailers, auto service stations, home improvement contractors, etc. don’t operate on large profit margins, so pulling 5% to 10% out for financing is hard to swallow.
  4. Talking about having to finance the purchase of your goods and/or services can be awkward and embarrassing. Then, if they don’t get approved it can be doubly awkward and embarrassing. So, unless you’re the fearless type, you will just hope they have room on their credit card or a healthy checking account.

Shall I go on?!

An effective financing program is not a one-size-fits-all proposition.  I see four key factors in whether you are right-sized with a financing program:

    1. What is the size of your operation?

Larger operations with a customer service desk or even an on-site finance manager are well better positioned to handle the complexities and communication required of in-store financing programs.

    1. What is your gross profit margin?

Businesses operating with low gross profit margins will struggle with the cost of in-house financing, especially those credit programs that cater to the less-than-prime consumer. No cost financing options are the most viable programs for these businesses.

    1. What product/service do you offer?

Most traditional retail sales finance lenders are selective on the industries they will serve and also the type of product and/or service being offered. For instance, you may be a home furnishings retailer but if you offer refinished/refurbished furniture, some lenders will not lend on this product. If you’re an automotive repair company that invoices a customer for repair work, some lenders require a break out of product portion of the invoice and that it not exceed a certain percentage of the bill. On the other hand, there are lending sources that do not care of the product or service, only of the applicant’s credit quality.

    1. Does your competition offer financing?

You will be a severe disadvantage if your competition down the road is offering consumers a way to pay over time. You don’t have to have an identical program but just accepting cash, check, or credit card won’t cut it. The attitude of “that’s not my customer” is short-sighted. The prime credit lenders are lending billions to high credit score consumers in establishments that understand that it is their customer!


Offering a pay-over-time option for consumers or patients is not a nice-to-have, but rather a necessity in today’s economy. But, choose wisely!

~ David Weyher