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offer finance to your customers

How do you offer finance to your customers?

Well, there are a few different ways. Some of these options require you to jump through hoops and wait for what will seem like a lifetime to get going. Others are a little bit easier. And then there is one which, if you are in the home improvement industry is by far the quickest and easiest.

If your reading this you most likely run a small business that likes the idea of offering finance. Offering finance to your customers will open new doors for your business by allowing you to compete with the larger companies that offer monthly finance to their customers and get more orders by not requiring payment in full. By offering finance to your customers you can quote a monthly price rather than the full price which makes it easier for the customer to say yes.

What options are out there to offer finance to your customers then?

The first option is to gain a facility with what I refer to as one of the “blue chip” lenders. These being the likes of Hitachi Capital, Barclays Partner Finance or Ikano Bank. These well known names are titans in the world of lending and were the first to allow businesses to broker loans on behalf of them, which would be paid out directly to the business upon supply/delivery of the good and/or services.

These lenders allow your customers to apply for a goods and services loan to buy your products. The funds are then paid out to your business by the lender upon delivery, minus a subsidy fee that the lender retains. Every time you offer finance to your customers the provider will retain a % of the loan amount. With the providers mentioned, in my experience, this subsidy is between 2-8%.

Gaining a facility with one of these lenders to offer finance to your customers can be tricky. They are very strict on who they grant a facility to and will only accept applications from businesses that are established (usually 2+ years) VAT registered, and have a minimum turnover over of £1million. In fact, a company that I once consulted for that was turning over £10million with over £1million in profits was turned down by all 3 of these lenders and was told that they would need to see more stability before granting a facility!

What if you’re not well established, don’t meet the turnover requirements?

If you’re not well established, don’t meet the turnover requirements you are going to have a tricky time gaining a facility to offer finance to your customers from one of these lenders. So what’s the other options? There are other customer finance facilities out there which aren’t quite as strict and these include the likes of V12 Retail Finance and DEKO.

These providers are a little bit less strict in terms of who they onboard and allow to offer finance to customers. However, these solutions do come with a caveat. As I mentioned above, providers that allow you to offer finance to your customers charge what is called a subsidy fee i.e every time you offer finance to your customers the provider will retain a % of the loan amount. From my experience with the afore mentioned providers the subsidy charged can range from 3-10% of the loan amount.

Hold up, don’t I need an FCA (Financial Conduct Authority) Licence?

You might have heard of the FCA, who are the UK regulator for financial products, and you may have heard that to offer finance to your customers that you need an FCA licence. Is this true? Generally speaking, yes. All of the options above require you to be authorised and regulated by the FCA.

Again this can take time, and prove difficult. The FCA, prior to granting a licence will require you to submit an application with details of both your business’ and personal financial status. One your application is submitted it can take up to 12 months for your licence to be granted. Only once you receive your FCA licence can you then proceed to approach the providers mentioned, to attempt to gain a finance facility to offer finance to your customers.

What about the nice and easy solution for those of you that are in the home improvement industry?

For businesses that are in the home improvement industry that want to offer finance to customers there is a really easy solution. Credabill allows you to get setup in minutes, and allows you to offer finance to your customers without any off the faff mentioned above.

Due to our unique quoting platform that only introduces finance at the point that your customer receives the quote you do not need to be directly authorised by the FCA. When you send a quote using Credabill, your customer will be presented with an option to pay monthly between 2-10 years. Your customer can apply directly from your branded quote and sign their credit agreement within minutes of receiving your quote. Once you have completed the job, you can request payout from the Credabill platform and you will be paid out.

You can be setup to offer finance to your customers in minutes on Credabill and can even try it out on a 30 day free trial. Our platform is perfect for plumbers, joiners, roofers, kitchen and bathroom fitters, double glazing fitters etc. A full list of accepted trades can be found here, and more info and access to the free trial can be found here.

To re-cap, there are a bunch of solutions to offer your customers finance out there but as far as we can see, our platform at Credabill is the only one that lets you get setup to offer your customers finance for their home improvements instantly. Find out more here