How to Drive Sales Extending Credit

A customer financing program could be the only thing standing between your business and a continual inflow of high-ticket sales. While customer financing was once restricted to big-league companies, new technology is making it something any small business can offer. Financing programs can boost customer loyalty and give you an edge over competitors.

Why Offer Customer Financing?

Customer financing is a win-win for your customers and your bottom line. It gives buyers what they want now while letting them pay for it in manageable chunks over time. You can raise your prices or introduce higher-ticket items because closing the sale becomes much easier. You’ll see larger basket sizes, more upsells and fewer abandoned carts.

There are overhead costs or fees involved with offering a financing option, but the ROI is high. By opening your high-ticket items to a wider customer base, you’ll drive more sales. Plus, when you offer an affordable solution for your customers, you generate loyalty, satisfaction and word-of-mouth marketing. Financing even helps your marketing department tailor campaigns around the appeal of an affordable offer that customers can jump on today.

Should You Offer In-House Customer Financing?

When you decide to offer customer financing, you’ll need to choose between in-house customer financing and outsourcing the financing to a third party.

If you offer in-house financing, you’re responsible for staying within legal boundaries of providing credit on purchases. Generally, this means giving the customer all the information surrounding their financing plan, such as the annual percentage rate (APR), amount financed, payment schedule and late fee policies. You aren’t legally obliged to run credit checks, but screening customers for their creditworthiness can help you minimize the risk of default.

While there are more work and overhead costs involved in in-house financing, you can profit from charging interest. Whether or not to charge interest is something you’ll need to decide, along with the rate at which to charge it.


  • Makes your business look well-established because it has the stability to offer financing for customers
  • Opportunity to earn interest and charge fees for financing


  • Less up-front profit and slow cash flow
  • Can be risky with the possibility of missed payments
  • Running credit checks is costly
  • Requires a time investment of staying on top of payments

Small business tip: You can turn your unpaid customer invoices into instant cash with invoice financing. Here’s how it works:

  • You select invoices you wish to finance
  • Your lender advances you a percentage of the invoice (up to 80%)
  • The lender charges a fee known as a factor each week until the invoices are paid in full
  • Once your clients pay their invoices, the lender issues you the reserved balance minus their fees

With instant access to the cash you’re owed, you can bridge cash flow gaps that are the result of extending customer credit.

Should You Outsource Customer Financing to a Third Party?

With more fintech-enabled companies offering third-party financing, in-house financing isn’t your only option. Outsourcing customer financing to a third party takes a lot of the burden off your business for a small price. In exchange for transaction fees, financing companies handle the entire process for you, from screening customers to collecting payments. Some companies even assume all the risk and pay you the full amount the customer owes upfront. This is ideal for smaller businesses with fewer resources, since they can reap the benefits of a customer financing program without the risk (or the strain on cash flow).


  • Save the time and money it takes to handle customer financing, so you can devote resources to other areas of your business
  • Potential to receive full payment upfront instead of just the first installment
  • No need to charge an interest fee to make up for overhead costs, which makes the program more appealing to customers
  • Financing partners often have widgets or badges you can add to your website next to “buy” buttons to educate the customer about their financing option
  • Eliminates the cost of credit checks because your financing partner does their screening


  • Pay transaction fees
  • You don’t own the relationship. If a customer has a negative interaction with your third-party financing provider, it could reflect poorly on you.

Increase in sales pipeline resulting from customer financing. 

How to Offer Customer Financing: Best Practices

Customer financing can be a game-changer for your business, so make sure you take the right steps when rolling out your program. Here are some tips and best practices:

Prominently Advertise Customer Financing as a Purchase Option

To get the most out of your customer financing program, do everything you can to make customers aware of the opportunity. If all they see is a large price tag next to your product, they may turn away before learning more about it. The financing option should always be displayed next to the full price. It should also be prominent throughout your advertising and sales copy.

Create Urgency with Marketing Programs Offering Financing Incentives

Try using a limited-time financing program to generate urgency. The option to get the product now and pay over time sweetens the pot, but a “now or never” incentive can seal the deal. Customers will want to take advantage of the payment plan option before it’s gone. Temporary offers work best with zero-interest financing plans, so the customer feels they’re at the best end of the deal. If you can offer a zero-down payment financing option as a limited-time program, even better.

Make the Process Easy, Quick and Seamless

Make it as easy as possible for customers to go through the financing approval process. If you’re using a third-party service, be sure to choose one with software that integrates seamlessly with your website. Frustrating technology hurdles can easily cause customers to abandon their carts altogether. Ask for the least amount of information needed. Only ask for more data if it’s required for their approval.

Train Your Sales Team on Customer Financing

Make sure your sales team members know how to use your customer financing incentive to help close sales. They should communicate the affordability the payment plan offers, as well as the advantages of having the product now instead of a later date.

Your sales training should also help sales reps become well versed in how your financing program works and how to respond to questions about the program. Any comment or question sales reps get about price should open them to bring up financing options, starting with the lowest possible monthly installment.

Third-Party Financing Solutions to Consider

When looking for a financing company to partner with, be sure to read through their terms. Some companies require you to meet minimum sales thresholds or give away large chunks of financed purchases. The best small business customer financing solutions take no more than 5% of each financed sale.

Look into whether a financing company approves customers with less-than-good credit. Many customers looking for a more affordable option may not have high credit scores, so find a company that can service thess customers.

Choose a financing service that assumes the risk for you so that that customer non-payment won’t affect your bottom line. Also, ensure your financing partner’s application process is easy and seamless for your customers so that they don’t abandon their cart mid-way.

Here are some third-party financing services to consider:

  • Viabill
  • Openpay
  • Afterpay
  • Paypal financing
  • Zipmoney
  • Ginoapay
  • Simpl
  • Zest

Staying Competitive in Option-Driven Consumer Markets

Today’s customers are accustomed to options, and they know how to do their research to find the best deals. In the online shopping economy, offering customer financing solutions can give you a more competitive edge. A great customer financing partner can enable you to raise your sales quota with minimal overhead investment.

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