How small businesses can offer customer financing


It is a program or service provided by a business in order to help consumers pay for items, goods, or services over time. Typically, financial support involves a request process in which the entire credit risk of the customer is assessed through a debt test.

Whereas, Customer financing allows small business customers to pay for purchases over time rather than make full payments on time. Businesses can donate money to customers by creating an internal process or using an external company provider to do the work for them.


Primary financing refers to financing in which the business operates as a lender and provides its own customer financing program. Basic financing is often more involved in the business process than in outside financing.

Third-party financing refers to the type of financing in which small business owners rely on a third-party financier to act as a lender in the transaction. For most of these plans, the customer enters the payment system to pay the full purchase price over time, usually with monthly payments.

Consumer financing options for small businesses

Internal loan

If you are a business that sells high-value goods or services, internal funding may be appropriate for your business. A few examples of products and services customers may want to finance include furniture, appliances, appliances, home improvement, and home repairs.

With an internal loan, you will need to pay the costs associated with the credit check and collection fees, which require both software and staff, as mentioned above. You will also need to create a credit policy for your business, and set your own terms for accepting incomplete payments from customers.

QuickBooks Online accounting software can simplify the payment process with automatic invoices and payment reminders. By using QuickBooks Payments, you can send paid online invoices to customers and your letters will be automatically integrated. With your payments and accounting all in one place, you will have more time to focus on your business.


Financial support for foreign buyers has recently become increasingly popular among businesses of all kinds, especially online retailers. Well-known online financial services providers include AfterPay, Confirm, Klarna, PayPal, and Quadpay.

These third-party financiers allow customers to apply for incomplete transaction costs and generally offer customers interest-free payment terms. Instalment payments are usually paid on a weekly or monthly basis.

Using third-party consumer financing, you will pay a pre-purchase purchase fee or pay a monthly minimum. The advantage of using a third-party financing company is that it does a lot of work for you, so you do not have to worry about completing debt checks or making payments.


Layaway is a payment system in which a business stores a product for a customer until the customer pays for the item, usually with a series of partial payments. In contrast to other financial systems, under the negligence agreement, the customer does not receive the item until it has been paid in full.

Under the termination agreement, if the customer does not complete the payment of the item, it will be returned to stock. Customer money may be refunded in full, deducted, or withdrawn, depending on the terms of the agreement. Some businesses choose to charge a fee until the customer has finished paying.

Layaway is declining in popularity as credit cards become available everywhere, but it can still be an attractive option for some businesses and consumers. Generally, a termination agreement allows the customer to avoid interest costs, and the price of the item remains unchanged. Layaway contracts reduce risk to the seller, and can be offered to customers with bad credit.

Pros and cons of customer financing 

Small business owners should consider both the pros and cons of consumer financing. 

Increase order prizes                                                                                                 

on average, the size of the order increases by 15% when businesses offer customers cash. Next, larger orders mean more revenue to improve your goal. Also, the customer gets to buy what they want instead of an option that may not be exactly what they need.

Reduce stress                                                                                                                If you decide to work with a third-party financier, you do not have to worry about account management or payment problems. Instead, you can focus on your company’s growth and rely on consistent cash flow.

Turn off extra sales                                                                                                   

Previous costs and sticker shocks can be a difficult obstacle to overcome when buyers decide to buy. However, if you are unable to deduct the cost of the product or service in monthly payments, customers may be able to pay those small fees. “Buy now, pay later” is a great way to close most of your sales for both major ticket items and large order sizes for less expensive items.

Cons of customer financing

If you are using a third-party financing provider, you will probably have to pay your expenses. In some cases, you will need to pay a lower monthly fee, while other providers charge a percentage for each transaction. Providing internal financial support may require investment in both staff and software services.

Some providers require a certain amount of work before you can give customers money during the exit process.

Customer acquisition costs 

Although funding is a great way to gain new customers, the amount you pay may not be worth it. You should check the return on investment after a few months of using customer support to make sure it is a good decision for your company.

Cost of customer financing 

The cost of incorporating customer support into your business model depends on which financial service you decide on.

With internal funding, you will cover the costs associated with debt testing and collecting customer payments. You will also need staff to process and complete those management tasks, which will include your costs.

With funding from third parties, you will have to pay for using those services. Payment may be a percentage of each transaction or monthly payment.


At the end of the day, it is up to you whether you want to offer a financial plan or financing options to your customers. Whether you decide to sell real estate from companies like Affirm or Klarna or offer in-house financing, these financial solutions can mean more sales.


Please enter your comment!
Please enter your name here