Creating flexible payment solutions by offering customer financing is a surefire way to boost sales and increase conversions. Known as Buy Now, Pay Later (BNPL) or Point of Sale (POS) loans, customer financing allows your customers to pay for your products or services through installments or store credit instead of requiring immediate full payment. There are a few ways to provide customer financing, and here’s how.

Step 1: Establish What Kind of Customer Financing You’d Like to Offer

Here, we consider whether we will offer customer financing directly in-house, through a third-party BNPL provider, or a combination of the two by integrating an embedded financial system into your internal operations. It’s important to note that customer financing involves conducting comprehensive credit checks, managing installments, collecting payments, and analyzing and managing risks. Regardless of the approach chosen, whether it’s a DIY solution or an embedded service, it is crucial to establish a robust and trustworthy financing system that keeps payments in check, and assures customer satisfaction and safety. 

It’s important factors to consider the following:

• Growth
• Customization
• Risk Calculation
• Insights 
• Integration 

Growth:

The main idea behind customer financing is to drive sales growth across all platforms, including your physical store, online store, mobile events, and popup locations. If internal growth is not feasible, it is important to choose a financing platform that provides the necessary tools to support your business’s expansion.

Customization:

Consider the amount of adaptable and adjustable financing terms you’d like to offer within your business. What sort of credit flexibility you would like to have when financing your customers. Would you like to control your installments, create dynamic plans, and tweak offerings on your products or services? A good financing software will let you get down into the specifics. 

Risk Calculation:

When it comes to risk analysis and management, it’s probably obvious that the more robust the software, the better. Financing your customers through embedded AI and ML-based models significantly lower the level of risk. Embedded financing can also protect businesses form the risk of lapsed payments. 

Insights: 

As a merchant or service provider, if you’re going to be offering customer financing, ideally you’d like to see who, when, what and why your customers are buying. That is extremely valuable information that you can leverage to increase sales, target promotions and manage the products or services that you are lending. 

Integration: 

The implementation of financing software should be a swift process, enabling businesses to quickly move forward with all the necessary tools within 1-2 business days. Additionally, the user experience should be kept as simple as possible on both ends, ensuring ease of use for both the merchants and, of course, the customers, which is of paramount importance.

Step 2: Choose Your Financial Partner 

For those looking for a hand (especially as an SMB) the best approach is to ask yourself, “which financial partner can join me on the journey.” While some may find pre-existing, out-of-the-box solutions suitable, it’s important to acknowledge that every business is unique. This implies that, especially in the initial stages, a certain level of customization and specificity is required to meet their specific needs. 

Step 3: Transform Your POS

Whether you choose in-house or external embedded financing systems, it is essential to incorporate the payment option across all your sales channels. This involves creating a point-of-sale (POS) system that allows you to customize financing options. For online retailers, it is crucial to include financing options in product listings and the checkout process to provide a seamless and convenient experience for customers.

Step 4: You Offer Customer Financing. Tell Everyone! 

What good is offering customers financing if no-one knows about it? Once you’ve launched your new system and you’re ready to sell, advertise installment deals and payment flexibility. Create campaigns, advertise on your online store, social media, and of course make sure your customers see the possibilities. YOu might be able to convert a casual browser into a buyer with a smart installment plan. 

The Downside to Customer Financing 

While customer financing can significantly drive up revenue, it’s important to be aware of certain aspects when considering BNPL providers. Some BNPLs may leverage customer data for their own benefit. Consider customer financing platforms that allow your business to maintain total control and oversight over your customers, ensuring their data is handled securely and responsibly.

To conclude 

Offering alternative payment plans through embedded customer financing is an excellent strategy to attract more customers and enhance customer loyalty. It is crucial to find the right partner for your business to implement customer financing effectively and ensure a successful and sustainable journey.