Reasons Why Your Business Should Offer Customer Finance

08th August 2022

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Do you know that businesses that offer customer finance tend to close more sales than those that don’t? Not everyone company has the available cash to make a big-ticket purchase when they need them and adding a financing option to your offering will help prospective customers access your products in an affordable way that will help your business grow.

This is a how-to guide for businesses that want to know how customer finance or vendor finance, can benefit them, as well as how to set up and manage a customer finance program.

Offering a finance solution may sound like it would be difficult, but the reality is the opposite, especially when you use a broker such as Anglo Scottish.

There are many reasons why customer finance or vendor, can be beneficial to your business.

There are many reasons why customer finance can be beneficial to your business. Here are a few of the main ones:

  • Customer financing helps you to overcome potential buying objections
  • Increases the size of your customer’s order
  • It adds an additional level of support to your customers
  • It’s easy and quick to arrange and manage. By working closely with an asset finance broker, there’s no additional work involved on your part. The broker will take care of everything.
  • Get paid fully on installation/ delivery.
  • Earn a commission.

Overcoming Buying objections

If a potential customer has an objection, such as they don’t have the cash available to fund your product, then offering them a finance option to split the costs may be just what they need for them to continue with the sale.

Your sales team can refer them to an asset finance specialist who can assess their needs and find the right finance deal to match their requirements, enabling you to focus on supplying the right products for their business needs.

Increased order size

One of the biggest benefits of offering customer financing is that it tends to increase your average deal size. As payments are made over time, rather than all at once, your customer is more likely to buy more, add on additional options or service packages, or choose a more expensive piece of equipment.

Additional Customer support

By offering a finance option, you are supporting your customer’s aspirations and enabling them to access vital equipment when needed.

You may also be able to provide additional products, such as maintenance or servicing, which will encourage your customer to return to you for follow-up business.

It’s easy and quick to arrange and manage

By working closely with an asset finance broker, there’s no additional work involved on your part. We will take care of everything. All you need to do is pass on the customer details, and details regarding the asset to a member of the Anglo Scottish team, and they will take care of the rest.

Get paid fully on installation/ delivery

With a finance agreement in place, your payment is received as soon as the customer receives the product. This means you can reinvest in new equipment, your staff or any other aspects of your business while developing a more secure cash flow.

Earn a commission

By introducing your customer to a finance broker like Anglo Scottish, you could receive a commission, further improving your margins.

Asset finance can help your customers get the equipment they need and help enhance the product offering you can provide.

 

Asset Finance options

Depending on the type of products or services you offer, there are several different types of finance options that your customers could benefit from.

Hire Purchase

Hire purchase is a type of lease agreement that gives your customer the option to own the asset at the end of the term. After an initial deposit, the outstanding balance is paid off in monthly instalments. Hire purchase agreements are one of the most popular ways of funding vehicles and machinery so that they are owned outright at the end of the agreed term.

Finance lease

With a finance lease, the equipment (asset) remains the property of the finance company, while your customer, retains and uses the asset, paying for its hire over the length of the lease term. At the end of the term, the customer has the option to arrange a new agreement or return the asset to the finance company.

Operating lease

An operating lease is a form of the rental agreement through which your customer can make use of an asset over a fixed period in return for regular rental instalments to the lessor (the finance company). At the end of the lease, the asset is returned to the lessor to be either re-hired or sold to release the residual value of the asset. Due to the nature of an operating lease, it is currently considered as an off-balance sheet arrangement, although forthcoming accounting regulations may change this in the future, subject to certain new rules.

No matter which option your customer chooses will make it easier for your customers to pay for goods and services on their terms.

How does Vendor finance work?

Many businesses worry that offering customer finance will be complicated and difficult, but this isn’t true at all; it’s quite simple! All you need is an experienced provider who specialises in helping SMEs offer these types of services such as Anglo Scottish Asset Finance.

When entering into discussions with your customer, simply advise them that finance is available, if they are interested to learn more, just pass their details onto us (as well as the asset details) and we’ll take it from there.

We’ll ask the customer about their business and their accounts history, and their business requirements. With this information, we’ll search the market to find them the best finance deal to suit their needs.

Once we’ve found a deal with the customer and they have been approved, we can arrange for the funds to be paid directly to your business.

Conclusion

If you’re still not convinced, there are plenty of other reasons why customer/vendor finance can be beneficial to your business. For example, it makes it easier for customers to buy from you by offering them flexible payment terms, which means they don’t have to worry about paying upfront for products or services. This increases the likelihood of them purchasing what they need from you instead of going elsewhere.

If you offer asset finance options, then you’ll be able to provide them with the right product at exactly the right price point: whether that’s through hire purchase agreements (HP), an operating lease, or a finance lease.

Contact our team today to find out more.

 


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