How Business to Consumer Financing Boosts Sales
Starting a business with a pricey inventory can be a challenge. You know you have a desirable product, but the price tag can make business slow as customers take time to consider whether or not your product fits within their budget. In the meantime, you’re in a situation in which something must be done to inspire cash flow. A solution for your business may be business to consumer financing, also known as customer financing.
The benefit of customer financing is it allows you to secure and maintain a customer base. By offering a payment plan your customer can afford, you have eased the financial burden and increased the likelihood of a purchase. The majority of customers find value in payment plans and are likely to do them again.
There are two options for offering business to consumer financing. In the first option, you do the financing on your own. This means you have to run credit checks, provide the contract, and collect payments. This option not only requires knowledge of legalities but requires significant work on the part of the business.
The second option is to employ the services of a credit firm to offer credit to your customers. This firm is responsible for everything you would have been in the first option, including many of the legalities. Most businesses would opt for the services of a third-party firm so they don’t have to learn a completely new business and can focus on the first.
The firm you work with will be available to your customers should they decide they would like to finance one of your products. The customer will fill out a financing application, either online or through your point-of-sale application. Because the third-party firm specializes in the business of financing, they can have an answer to your customer in seconds. Once they’re approved, you receive payment in full and the customer will receive the product.
Both the customer and your business will pay the third-party-firm. The customer will pay interest on the financing through their payment schedule, and your business will pay a percentage for each processed transaction.
There are many financing platforms to choose from, and the one you ultimately choose will be the one best suited for your business needs. Fees will vary as well. Once you find a provider that seems to fit, weigh the costs to be sure it still makes sense for your business. Business to consumer financing could be the biggest tool you utilize to secure your business’s future.