Businesses large and small understand the value of offering customers a low monthly payment for their products or services as opposed to a lump sum at the point of sale. It’s why savvy business owners turn to financing. Whether the consumer has prime, near-prime, or sub-prime credit, the appeal of stretching out payments, especially ones with 0% interest, is very real.
Businesses primarily lean on third party lenders to transact their financing, allowing the business to collect most of the purchase price shortly after the sale is completed. This works well for businesses that have mostly prime credit customers, as the cost of this type of financing grows significantly for customers with credit scores that are less than prime.
Financing the other half
A common conflict many finance friendly business owners face is financing customers with less-than-prime credit. Especially so, considering that nearly half of the nation has less-than-prime credit. Not only is the process arduous but it can be embarrassing for both the business’s customer and the staff. Today’s lending industry often comes up short on solutions for the growing percentage of less-than-prime customers who need a real time solution.
“In-house financing” is a term used to signify a merchant offering a payment plan to its customer rather than requiring full payment at time of sale. Like lay-away, in-house financing enables a merchant’s customer to pay over time rather than in lump sum, up front. Unlike lay-away, the sale is completed before full payment is made.
But in-house financing comes with its own hurdles
Two issues standout as challenges with businesses that run in-house financing. First, the merchant does not receive all the funds of the sale at the time of the sale. Second, the merchant runs the risk of non-payment by its customer.
Many businesses that have been successful with SweetPay’s in-house financing program have mitigated these issues and, thus, added sales they would have otherwise lost. These businesses, including coaching, training, med-spas and other professional services related businesses, are able to tie the completion or completeness of their service with the majority of payment streams coming in from the customer.
Nine tenths of a sale is better than none.
Businesses spend varying levels of their budget on marketing and advertising to reach potential customers. Regardless of the level of that spend, there is a cost expended to acquire a customer. So, when you have a customer interested in purchasing at the point-of-sale, and you’ve already expended cost to engage that customer, making the sale happen should be of the utmost importance, regardless if it results in a small hit to your profit margin.
What it boils down to is this: in-house financing, outsourced, can be a great way to collect on sales that would otherwise walk. Using a company like SweetPay to automate your in-house financing serves three major purposes: 1.) bifurcate the relationship with your customers in the case of non-payment, 2.) remove the administrative work required to process and service in-house financing, and 3.) ensure you are processing in-house financing in a compliant manner.
Most businesses are either not sure how to go about in-house financing or believe it’s too risky. SweetPay has proven, with many business testimonials and thousands of applicants, to put both those issues to rest.