offering finance to customers (small business)

[Adamcatterall]

hi guys, I was wondering if anybody could advise me on how to offer finance to my customers.

My products are fairly expensive (£200-£2000/pc retail) so I think creating payment plans where my customers can spread the costs over say 6-12 months would generate more sales. I have had many enquirys about payment plans. As yet I have not been able to come up with a solution to provide this service. Many third party financial companies require you to have a minimum turnover of £500,000 which I'm no where near... yet

Any help/advice greatly appreciated!!

Kind regards Adam
MotoX1
Www.motox1-atv.co.uk

 

[Mr D]

Can you offer a payment plan yourself? Or does it have to be through a financial organisation?

 

[Adamcatterall]

thanks for the reply, no this isn't really an option for me...my sales to an extent generate my working capital so I would need to ensure the payments from my stock are payed in full before going out to the customer rather than receiving the installment myself over 6-12 months, Also I wouldn't want that risk of miss payments etc if that makes sense.

 

[Mr D]

So you would need to get payment from a third party that would deal with the loans.

Tricky. And as you say wanting a minimum turnover.

 

[Adamcatterall]

Yes exactly that, I'm yet to find a solution though do you know of any other ways round it?

 

[Mr D]

There was something.
Will see if I still have the file on a cd. May take a few days if I even have it, sorry.

 

[Mr D]

Ah here it is.
http://www.omnicapitalretailfinance.co.uk/products/interest-free-credit/

A small business in the slave trade has used them. Some of the stuff is hundreds or thousands of pounds.

 

[Mark T Jones]

Seriously, at this level of spend I would stick to payment by credit card.

To offer finance you will need FCA authorisation and in many cases, customers who don't have capacity on cards are likely to be declined

 

[Adamcatterall]

Hi guys thanks for the feedback, I'll have a look at the link, have you had any experience with this company? Regards

 

[The Byre]

Seriously, at this level of spend I would stick to payment by credit card.

To offer finance you will need FCA authorisation and in many cases, customers who don't have capacity on cards are likely to be declined

This!

There are companies that will sell you all kinds of plans and schemes, but if someone can't put £200 or even £2,000 on their credit card, then you certainly should not be getting involved in their finances!

Asking for a payment plan for a £1k purchase hardly bodes well for their ability to repay!

 

[Gordon - Commercial Finance]

If you work through a broker, they can arrange finance for your customers and then there's no minimum turnover requirement, and the broker would have to have all the necessary FCA permissions in place to offer consumer credit facilities. Takes the risk and the effort away from you.
Speak to a broker and strike up a good relationship - it should be mutually beneficial for years to come!

 

[pen2670]

Hi Adam

Have you considered offering payment plans - where your customers pay in installments, but don't take the goods until after its fully paid. Rather than finance where they take the goods before finishing paying for it?

 

[Asjs3n4]

You should first establish your clients typical credit score types, are they individuals or businesses. There are allot of solutions but Barcalys Bank actually has very competative small loans deal with low rates...

 

[Mark T Jones]

You should first establish your clients typical credit score types, are they individuals or businesses. There are allot of solutions but Barcalys Bank actually has very competative small loans deal with low rates...

Seriously? Why does the op want to be credit scoring? It isn't a good idea to tie in with a single bank for funding

Just, no

 

[Root 66 Woodshop]

We use to use a finance company for some of the larger installations of roller shutter and security grilles - that we install... some of our quotations were going out at £6000 - £15000 to secure business properties... they provided us with their own finance calculator which was brilliant to be able to offer to customers the two options... most of the time customers would just go for the payment rather than the payment plan...

 

[MikeJ]

Try someone like this...

https://www.divido.com/how-it-works

Invariably when a consumer is offered finance, the shop has little to do with it. They're borrowing money from a third party who charges interest. The interest free offers you see in shops are done because the finance company wants the details of individuals that need finance, so they can flog them other loans.

Google "Consumer Finance", there's loads of options.

 

[Mark T Jones]

Try someone like this...

https://www.divido.com/how-it-works

Invariably when a consumer is offered finance, the shop has little to do with it. They're borrowing money from a third party who charges interest. The interest free offers you see in shops are done because the finance company wants the details of individuals that need finance, so they can flog them other loans.

Google "Consumer Finance", there's loads of options.

For clarity, interest free credit is a scheme subsidised by the supplier/outlet.

I don't know Divido, but the challenge I have with a lot of these 'innovative' schemes (They approach me constantly for introductions) is that they are very guarded about the costs, terms etc. Just be 100% clear of what your contract is before you sign up!

 

[MikeJ]

For clarity, interest free credit is a scheme subsidised by the supplier/outlet.

That's not what I was told, but I don't have first hand experience. The credit company wants details of people and there's always the chance people will miss a payment and have to pay interest.

 

[Mark T Jones]

That's not what I was told, but I don't have first hand experience. The credit company wants details of people and there's always the chance people will miss a payment and have to pay interest.

It's a myth. The vendor always subsidises the scheme - the subsidy rate might be affected to account for additional revenue schemes

 

[Businessquotes]

There's plenty of retail finance providers at your level, and you don't need a consumer credit licence if you offering payments up to 12 months, that was changed a few years back. Most shops use people like DEKO (used to be Pay4later), hitachi finance but like MikeJ says there's lots of disruptors emerging in this sector - Divido looks pretty good. Use one of the many quote services out there.

 

[Adamcatterall]

HI guys thanks for all the responses, appreciate it. Yes I have looked into these third party companies but many require a minimum turnover which far exceeds me at the moment, divido for example require 250k minimum.

Regarding payment plans yes I have considered this also but I find for the type of product I’m selling it doesn’t really appeal to my audience.

I feel I could increase sales allot by offering finance but I’m still finding it very hard to find a solution, it seems I would just have to grow my turnover dramatically in order to be able to meet the criteria of these companies (easier said than done without a finance option)

 

[Gordon - Commercial Finance]

Did you approach Hitachi Retail Finance or Close Brothers Retail Finance? Do they have the same turnover requirements?

 

[Adamcatterall]

Thanks for all the replies here guys, Appriciate it!

 

[Businessquotes]

Hi Adam, Here's a new way customers can use existing credit facilities (Cards) and split the payments equally over a period of time - https://www.splitit.com/ not used them personally but there's quite a few large UK companies trying this model and it appeals because no new credit line needed and monthly payments means you don't land a large sum in one go on the credit cards which invariable will have a high APR.

 

[Ian J]

Here's a new way customers can use existing credit facilities (Cards) and split the payments equally over a period of time

Interesting company. The latest accounts filed show it to have a net worth of £2,000 and no UK directors