By Bob Lovinger
One Size Merchant Consumer Financing Does Not Fit All
My life would be so much easier if I had one consumer financing lender that was appropriate for every business.
Training my sales partners would be a piece-of-cake.
Some financing brokers in this space do just that, and ignore the fact that no one lender can be the right solution for every business. I see it every day. Businesses that are stuck with $200 lease payments for programs that don’t fit them simply because a sales agent was motivated by a large pay day.
Consumer financing is a wonderful solution for businesses to incorporate. If you ask me, every business that sells something for more than a couple hundred dollars should offer some kind of financing or payment plan option. It’s really a no-brainer. The facts are that a large number of people are unable to reach into their wallet and make those purchases.
As important, businesses that really buy into the consumer financing and promote it will see an increase in prospects. For this group of consumers, the competition pool is significantly reduced if financing is offered. And, people that utilize financing spend more than people that utilize their own resources.
But not all financing solutions are created equal.
The reason we work with over twenty credit based and non-credit based lenders is because we have to in order to assure our business clients the best chance for success.
Sure, it makes it more complicated of a sale. Sure, I would love to simplify my business. But to do this right requires a broad array of solutions.
So, what determines the RIGHT solution for a business when it comes to consumer financing.
1. Business Vertical- not all lenders will work with all business types.
2. Sales Ticket Amounts- What is the price range of your sales?
3. Customer Demographics- Who are your customers? Young or old? Established or starting out? Do they typically have checking accounts? Can they come up with an initial deposit?
4. Sales Approach- Does your business have a buy and take away sale where you need instant, firm decisions? Is your business able to wait until after your product or service has been delivered to get paid?
5. Promotion Needs- Is it customary in your industry to offer 0% promotion windows?
6. Business Willingness- How involved is your business willing to get in the financing process?
Most of the time, the platform we provide our business clients will include 2 to 4 lenders, sometimes more. And the process does not end there. For example, business owners will sometimes insist that they don’t need a sub-prime lender because they have “high end” customers. As the loan applications start coming in, we quickly learn that even “high end” people have credit problems. We’ll gauge the results and make adjustments when possible, and appropriate.
The moral of the story, if you see a business in the consumer financing space that insists that their single lender program will be the right solution for all, run the other way. It’s not possible and unless you’re versed on the industry, it’s difficult for you to know.
Bob Lovinger is the President and Founder of FLEXXBUY.
He has been in the consumer credit and financing industry for over 25 years.
FLEXXBUY focuses on providing financing for businesses and their customers.