As more customers cut back on spending due to the harsh economic situation, your business will suffer when they postpone or cancel their plans to buy from you. Whether you’re a B2B or B2C company, you need to find ways to encourage more purchases from your customers. Financing is the most viable solution, and this article discusses why customers are looking for finance options.
What is financing?
You’ve probably seen some car, real estate, or electronics ads with a disclaimer indicating finance options or financing is available. Financing is arranging for access to funds from lenders such as banks to enable purchases when a customer lacks the resources to manage said purchase themselves. Financing allows customers to buy whatever they want and pay back the lender in manageable instalments. Typical financing scenarios include vehicle finance, property finance, education funding, invoice finance, and business expansion.
Your business could present finance options to attract more customers who wish to buy but are also affected by the tough economic situation. Customers like such arrangements because:
• Waiting to buy later means they won’t utilise the item now when they need it the most.
• They may otherwise fail to invest in a lucrative and time-sensitive opportunity.
• They may miss out on the opportunity since there are no guarantees they will afford the purchase later.
Benefits of financing
Following the reasons why more customers consider and prioritise finance, here are the advantages of considering financing:
A low-risk solution for your business
Instead of your customers paying you monthly instalments for their purchases, you transfer the risk of defaulting to a third party. This way, the third party settles the bill on behalf of the client and relies on their superior lending experience and expertise to collect the instalments. Additionally, an excellent third-party financier has checks and balances to vet potential customers, thus significantly lowering the risks involved.
Speeds up the sales process
In most instances, customers fail to buy from you because they can’t afford your prices now and don’t have a realistic timeframe for when they will. Since they already like what you offer and would gladly complete the purchase, arranging for financing gives them a way forward. This way, you’ll enjoy much faster sales processes.
Attracts more customers
As more customers find your financing solution practical and affordable, they won’t hesitate to approach your business. Affordability is critical, with more customers wary of overspending in the uncertain economic environment. Financing breaks costly products into more affordable instalment-style payments, easing the customer’s fears. Attracting more customers means a higher probability of closing more sales, thus, a more profitable business.
Increase average order value
In financing, breaking down a substantial initial payment into smaller instalments significantly makes it more affordable and manageable for customers. Additionally, increasing the monthly instalments by a small percentage allows a customer to buy a higher-value product from you. This upselling tactic will increase your average order value while keeping the purchase affordable for your customers.
Improves your cash flow
When customers opt for financing, the lender disburses the funds to their accounts, thus increasing the cash at hand. An improved cash flow is vital for your business operations. You can increase stock, develop new products and services, market better, etc.
Tips on presenting financing to your customers
Ensure you offer the right financing solution
Customers whose only impediment to completing the purchase is affordability typically consider financing when it is in line with their needs. Therefore, research the market to determine which solution providers are the right fit for your industry. For example, a customer looking to renovate their office space should find fit-out financing ideal for their needs.
Check the financing partner’s reputation
Reputation is critical when discussing financing, and your choice determines whether the offer will attract more customers. Therefore, pick a partner with years of experience and a solid track record operating in your industry.
Make the option abundantly clear
Let your customers know they can access this option across all your communication channels. Presenting it at the final purchase stages limits its impact on your business. In contrast, letting customers know from the start that financing is available influences their decisions and makes what seemed impossible a reality for them.
Customer finance – find out more
Offer leasing alongside cash purchase to open many doors for your business and help your customers overcome the challenge of investing in equipment in this fast growing economy. As a supplier, you can help your customers by spreading their cash flow and provide a finance quote tailored to their needs. This increases your chances of securing the order over your competitor and maximises your potential sales. Through our service, you become flexible, adaptable and approachable to putting their needs first.
Financing presents a win-win situation for you and your customers. They love how it enables them to manage large purchases, and your business enjoys a better cash flow and more business opportunities. You only need to find the right partner. Read more about offering leasing to your customers here.
Get in touch today, and let us help you scale your business to even greater success.