Financing solutions provide various benefits to both merchants & customers. As an example, financing options help companies to deal with big contracts. Moreover, it also allows companies to increase their sales and as well expand their average transaction amount. On the other hand, providing financial offers can attract new consumers to your business. Financing allows your clients to pay conveniently with easy installments for massive purchases. That is why the demand for consumer financing has increased massively at that time. Most people are going for consumer financing procedure to pay the large purchases flexibly and effortlessly. Furthermore, a financing solution will assist your company in earning repeat business for new customers.
The most important thing is, your customers may not have hard cash all the time to pay in advance for large purchases. Besides, they may not have enough time to arrange cash for repair jobs during emergencies. So, if you offer financing options to your clients, they can avail of regular loan payments for their large amount purchases. It will provide more purchasing capabilities to them also.
You should know that building a good financial plan is not so easy. Intense effort, fair imagination capability, massive data collection, and analysis are essential to creating a good financial plan. It will help your company to stay focused on its growth. Furthermore, it can help your company out of any financial crisis or unexpected issues efficiently.
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Types of financing
There are varieties of financing options available in the market at present.
i) Venture capital is a specialized solution that is capable of funding new companies by assisting in their expansion attempts.
ii)On the other hand, trade finance is responsible for international trade. It issues the letter of credits for purchasing items from foreign companies.
iii) Apart from that, the bank loan is easily accessible for consumer financing and business financing. One can avail of bank loans regarding a job, household, education, purchasing purposes.
There is no doubt that financing options have numerous benefits for both merchants and consumers. We will discuss the top 5 advantages of financing facilities in the modern market. Read the following article to know why sales financing, business financing, and consumer financing is becoming very popular these days.
The top 5 benefits of financing for merchants and consumers: –
Both consumers and merchants are getting benefitted from financing solutions. Because the finance option provides potential and flexibilities to clients for buying more products and allows businesses to boost their sales. Hence, it improves the cash flow between clients and merchants conveniently.
Financing facilities can help your business to boost its sales by providing flexible buying options to your clients. Customers can avail of regular loan payment schemes according to their budget on the purchase of costly products.
Customers try to avoid expensive items due to their excessive prices. They may not want to bear the expenses of costly items as well. Introducing financing options to your clients at the beginning of sales can remove the “expensive” tag from the high-priced items. Moreover, it can make the entire payment process convenient for them. That is why customers prefer financing always as it allows them to buy their favorite products without paying the full price beforehand. Therefore, they will get more buying power to purchase the products they want without any inconvenience.
It would be best to include flexible financing schemes available for the consumers. After that, they can choose any of those schemes according to their budget. An affordable scheme can help your clients to buy their favorite items cost-effectively. Furthermore, your customers will prioritize your company for better pricing and relevant financing facilities. According to a survey, when a company provides a pre-sale financing program to their customers, their sales are enhanced by almost 30%.
Increase average sales value
You can utilize the benefits of your financing program as an efficient tool for up-selling consumers. It will definitely help you to boost your average sales value. To do this, you have to convince your customers regarding how their increased monthly loan payments can help them to avail themselves of the additional benefits of their favorite items they want. This financing counselling will not only help you to increase your transaction sizes but will boost up your total revenue also.
A lack of payment options can be responsible for abandoning the carts of your customers. Many people face unplanned payment plans while purchasing items often. So, offering financing options will help them to choose additional terms for convenient payment methods. Not all customers carry hard amounts of cash for purchasing items. Therefore, they won’t mind buying quality items with financing support. In addition, the customers who have already financed items successfully from your company will be comfortable making future purchases from you as well. Thus, consumer financing can bring more traffic to your business by reducing the financial stress of customers
Improve cash flow
You can boost up the cash flow of your business by taking the help of a third-party lender also. You will receive the complete amount in your bank account that you need to purchase after the loan approval from the third-party lender. It will help your business to maintain an excellent cash flow. Moreover, your company will be able to avoid any financing-related risk by using a third-party lender. So, you do not have to face any payment-related issues while managing the regular payments of your customers. In that case, if your customer misses monthly installments of the loan, your company will not be responsible for the mishap. Thus, you don’t need to hamper your business’s cash flow to support other financial sales.
Furthermore, you can invest your funds for further benefits of your company regarding inventory solutions and staff management without keeping any financial risk in mind.
Besides, financing improves your customers’ compatibility to replace or upgrade their old equipment with new ones in a budget-friendly way. It will help to improve your business’s cash flow undoubtedly.
Get new customers
When a particular business authority provides financing programs, they expand their prospective customer base by making their products budget-friendly for new customers. Sometimes, customers hesitate to buy expensive items due to the lack of upfront cash in their pocket. The financing facility divides large purchases into flexible payments that can be afforded by every person conveniently. Hence, more people will be attracted to your company for affordable purchase rates.
Apart from that, you will be able to set up a reliable customer-merchant relationship by allowing people to purchase with finance. Trustworthiness is the pillar of every business industry. As a result, few satisfied clients can give numerous referrals to your company, and you can improve your customer base relatively.
Although, it has become difficult to compete with large chains that offer products at a wholesale price almost these days. So, we will suggest you enhance your in-house financing with conventional personalization in order to make your company favorable towards your new clients.
Easy to apply and drive repeat business
Nowadays, it has become easy to apply for in-house financing loans with the help of automation platforms. This process can complete the entire application process within a few minutes while keeping you and the lender protected. Furthermore, these automation platforms can evaluate the borrowers’ profiles and select those who can pay back their loans without any issue. So, the entire financing process is now user-friendly and easily applicable for all users.
Besides, your financing program will bring back your customers to your business for future purchases. So, you have to establish your brand’s loyalty at the early stage of your financing to increase your revenue among your clients’ base. If customers can understand your financing benefits at once, they will definitely return to your business for making big purchases again with financing. If you can offer great value to your customers with your financing offers, that can help your customers to get the items they need exactly without cutting down their budgets. Therefore, it will help you to improve the users’ experience of your company effectively. The more positive responses your company can avail of, the more revenue and reputation your company will acquire. So, if you are not offering finance to your customers, you might be losing the competition to your business competitor, who included financing to their services.
Getting a loan swiftly at the location of the sale is all you want. Nowadays, availing of installment loans for a car or phone is very natural. Credit has become a very crucial part of our lives for providing financial support when we need it. Moreover, all the aspects of the business economy depend upon sales financing and consumer financing. Capital markets invest money to support businesses whereas, businesses provide money for supporting individuals.
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Allison Janney is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.