Offering payment plans for your customers is a powerful way to increase sales and improve customer loyalty, especially if your products or services are on the expensive side. If you’re on the hunt for a long-term strategy to boost business and improve your cash flow, it may be time to offer payment plan to customers.
1) Reach a Broader Market
Potential customers may skip your product or service simply because they can’t afford it. Offering payment plans opens up your store to those who don’t have the money available for an upfront purchase, but can afford it if they spread out the cost over time.
2) Improve Your Cash Flow
Many businesses find that receiving steady payments in smaller sums allows them to run their businesses more efficiently, rather than receiving larger sums infrequently. After all, you need to have predictable liquid cash available to keep your business moving forward. When you have money from accounts receivable coming in consistently, you can better plan your finances to pay for inventory or employee wages.
3) Boost Your Brand
Offering payment plans shows empathy and encourages people to view your company in a more favorable light. You can use your payment plan options in your marketing materials to show the world that your business is accessible to all people, not just those with significant spending power.
4) Make Products Appear More Affordable
Sometimes the full price of an item or service can be intimidating. Say you were planning on selling your own used vehicle privately and your asking price is ₹500,000. 12 payments of ₹41,000 is going to sound much more feasible and appeal to a lot of potential buyers. The same principle applies in a business setting — attractive pricing drives conversions and sales.
5) Improve Customer Happiness
Offering financing options is the kind of good business that keeps people coming back. When you’re willing to work with customers, they’re more likely to recommend your business to their friends and family. Additionally, providing financing options encourages satisfied shoppers to leave positive customer reviews, which can help your business grow.
6) Encourage Larger Purchases
When your customers have more money in their pocket, they’re more likely to place a larger order. In addition to making your prices appear lower, financing also encourages higher volumes of spending. An impulse buy suddenly seems more appealing when it’s only an extra ₹100 per month.
There are downsides to offering payment plans, too. The biggest one is that some customers may end up paying late, or in some rare cases, not at all. That’s why you may want to check an applicant’s credit before allowing them to use a financing plan. At the same time, as long as you have cash flow coming in from multiple accounts receivable consistently, delayed payments shouldn’t be a major problem. Do your homework before implementing financing options, and you may just find that the benefits outweigh the risks.