Did you know that only 48% of small businesses have their financial needs met?
Unfortunately, this also means that more than half of your customer base is not in an optimum financial situation at the moment — which will ultimately make them more hesitant to do business with your company.
To make matters worse, many of these buyers will have already tried to attain funding elsewhere, only to be denied either in full or in part. Others simply never apply for funding over fears of being denied (and wasting valuable resources in the process).
In any case, it all results in their hands being tied — and your company losing business because of it.
This is why many B2B companies take it upon themselves to offer financing directly to their cash-strapped customers.
Customer financing is a funding option where buyers pay off purchases over time, while receiving the purchased products or services immediately.
Typically, the process for obtaining financing goes as follows:
B2B companies have traditionally offered in-house financing solutions to their customers, themselves. Providers usually allow buyers to extend terms out to 30, 60, or 90 days — while setting interest and other terms based on the circumstances.
Today, many providers are partnering with third-party companies to evolve beyond these traditional B2B net terms. Buy Now, Pay Later (BNPL) providers like Credit Key now allow providers to extend a financing option that’s much more in line with the modern B2B buyer’s needs and expectations.
Regardless of how you offer financing, doing so will bring a number of benefits to your business.
As we said at the start, many of your customers simply don’t have the buying power to purchase what they need from your company without financing. This causes many to be rather frugal with their spending — and prohibits others from making any purchases, at all.
That said, offering financing as needed to your customers effectively puts more buying power in their hands right when they need to make a purchase. This makes your most cash-strapped customers more likely to convert — and also allows your regular customers to increase their spending without endangering their cash flow.
Case in point:
Providing a buyer-friendly financing option will enhance your customers’ overall experience with your brand.
If you’re able to continually provide for their needs (financial and otherwise), they have every reason to keep coming back to your company. This can also incentivize your satisfied customers to refer your company to others in their network — especially those who may be in similar financial situations.
If customers need to talk to sales, fill out a lengthy credit application to make a purchase, there’s a good chance they won’t convert. To increase conversion rates, the goal should be to find out what your customers need.
- Credit Key CRO, Eric Allen in his Executive Conversation with DigitalCommerce360. Read more here.
To be sure, if you don’t offer some type of financing to your customers, you’re missing out on a ton of potential business.
Still, a lot goes into making sure the financing options you provide are optimized for both your customers and your team. Knowing what it all involves is crucial to conducting a cost-benefit analysis of your financing initiatives — and determining whether or not to enlist the help of a third-party provider.
For starters, you need to understand your team’s capacity for managing customer accounts over time.
Think about everything that’s involved here, such as:
Consider whether your team can handle the additional workload as is — or if doing so might stretch them too thin. Similarly, assess the need for more training — and, again, if this additional training might distract your team from their current workload.
And, of course, you need to know that you’ll be able to actually afford to finance your customers’ purchases while staying cash flow positive, yourself.
Understanding your audience’s financial circumstances is vital to offering a practical financing solution to them.
You should have a general idea of how much your customers need to finance, and how long they need to pay off their purchases. This will help you identify the terms you’ll need to offer for them to actually take advantage of your financing in the first place.
(For example, if most of your customers need more than 90 days to pay off their purchases, there’s not much sense in offering net-30 terms…right?)
Your customers’ financial circumstances will also help you assess the risks involved in funding their purchases — and allow you to set more personalized credit limits for your individual customers.
Your customers will only take advantage of your financing option if:
So, you need to have a plan in place to make it all happen.
First, consider how you’ll promote the offer to your clients. What will your message be? What channels will you use? How can you integrate this promotion into your current marketing campaigns and sales processes?
Yes, you’ll likely generate some additional business by quietly introducing a new financing option to your customers.
But, a comprehensive, strategic approach will be necessary to experience the full range of benefits we’ve discussed. To this end, knowing how to promote the new service in a way that your audience appreciates is key.
You also need to make it as easy as possible for your customers to use your new financing service appropriately. This will involve:
Depending on the above, you may choose to offer financing directly to your customers, or via a third-party partner.
Let’s now take a look at the pros and cons of each route.
| (Note: Since all third-party financing companies are created differently, the following varies by provider.) For more information on third party provider in general - please checkout this payments buyers' guide. |
Credit Key’s B2B Buy Now, Pay Later financing services were created with both your customers and your business in mind.
We deliver the key benefits of modern B2B BNPL solutions — while also working to fully integrate our services into your processes, and your customer experience. On top of providing buyer-friendly financing options and streamlined processes, we also work closely with partners to promote Credit Key throughout the sales funnel.
The result:
A comprehensive, branded financing service that meets the needs of your individual customers — and brings more business to your doorstep with minimal effort on your part.