Is Offering Payment Plans to Customers a Smart Move for Your Business?

  • Prerna
  • March 21, 2024
Is Offering Payment Plans to Customers a Smart Move for Your Business

It is often difficult for customers to pay for big-ticket items, and this is where the role of a payment plan comes into play. While it gives businesses an edge by enabling them to make a product or service more accessible, for customers, it is the ease of breaking one large payment into many small, flexible payments. 

When viewed broadly, customers often hesitate to make a purchase or undergo treatment, either because of poor quality or its high cost. Providing ease in the latter aspect through customer payment plan solutions can benefit your business. But the question now arises: How can your business leverage the power of payment plans? 

Expand Your Reach: Discover the Power of Offering Financing to Your Customers!

To learn about this, scroll down and delve into the blog.

What Is a Customer Payment Plan?

Customer payment plans are one of the most effective approaches out there, allowing customers to pay for products or services over a manageable period. This approach enhances affordability and accessibility for consumers. Therefore, it allows them to manage their finances more effectively. 

This approach not only assists customers but also helps businesses drive their sales. It is a strategic financing tool that enhances sales, builds customer loyalty, and taps into a broader market. Although payments are received over time, these plans often lead to more consistent cash flow. It's like having a steady stream instead of a seasonal waterfall. 

How Are Customer Payment Plans Different From the Traditional Approach?

In broad terms, flexible payment is like offering a tailored suit to the customer instead of a one-size-fits-all approach, which is typical of traditional financing. Let's put things into perspective with the help of the chart outlined below: 

FeaturesAlternative Financing OptionsTraditional Financing OptionsDifferentiating Points
Easy ImplementationYesNoAlternative financing options such as customer payment plans are easier to implement as they don't require extensive paperwork or complex agreements.
Credit ChecksNoYesTraditional financing usually requires thorough credit assessments, unlike customer payment plans.
AccessibilityYesNoCustomer payment plans are accessible to a wider range of customers, including those with unfavorable credit history.
Flexible TermsYesNoBusinesses have the flexibility they need when it comes to offering customer payment plans. They can tweak and adjust things like the duration of the plan and the amount to meet the budgetary requirements of their customers. In comparison, traditional methods are often referred to as non-flexible.
Cash FlowYesNoCustomer payment plans improve cash flow for businesses through the structured management of payments, whereas traditional financing involves larger, one-time payments that can disrupt cash flow.
Risk LevelLowerHigherSmaller, more frequent payments equate to lower risk with customer payment plans, while large sums in traditional financing increase risk.
Long-Term Customer RelationshipsYesNoCustomer payment plans, through ongoing payments, build long-term relationships, unlike traditional financing, which is often termed as a one-time interaction.
Monitoring RequiredYesNoCustomer payment plans may require regular monitoring and management of payments, which is often automated, whereas traditional financing requires minimal management once the loan is processed.
Marketing AppealYesNoThe flexible and affordable nature of customer payment plans has a high appeal in marketing compared to the rigid structure of traditional financing.

Is Offering Payment Plans to Customers Beneficial?

Offering flexible payment plans to customers is like opening a door to a world of possibilities for both businesses and customers. It's a strategic combination of affordability and profitability. 

This means that by breaking down the initial cost into bite-sized payments, businesses communicate to customers that their products or services are affordable. Consequently, this approach increases customer purchase traffic, which in turn boosts the profitability of the business.

For instance, a customer needs to purchase your services, but the price tag feels like a burden on their pockets. Here, the flexible payment plan comes into play, breaking down the service cost into manageable payments. All in all, offering flexible payment plans to customers proves more advantageous than disadvantageous.  

Here are some reasons why:

  • Boosts customer satisfaction and loyalty, leading to repeat purchases and positive word-of-mouth branding.
  • Gives a competitive edge in the market by standing out from competitors who only accept upfront payments.
  • This often results in customers purchasing higher-priced items or additional products/services, subsequently resulting in higher average order values.
  • Provides a steady stream of income over time, helping businesses manage cash flow more effectively.
customer-payment-plans

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How to Offer Payment Plans to Customers?

To offer payment plans first choose which goods or services are high or medium priced. Because most customers prefer paying for high-ticket items or services in small-sized, manageable payments. 

Second, consider your costs, and then decide the terms you would like to offer to your customers. For instance, would you like your payment terms to be spread over 4, 6, or more weeks? How would you like to settle a payment, in cases, where a customer misses or delays the payment? 

Third, share an agreement with the customers to leave no room for future missed opportunities. Lastly, choose a platform or a tool that befittingly aligns with your unique business needs. 

Once the plan is in place, research and choose a platform that best meets your unique business needs. For example, Credee!

Credee is adept at streamlining financing operations for businesses, be they small or large. One of its financing tools, termed as “payment plan” can help you achieve the goals you desire. In case of late and missed payments, this tool can help protect your payments by offering a safety net, ensuring there is never room for compounding financial stress.

Types of Payment Plans

Payment plans, tailored to meet the needs of both businesses and consumers.

Here are some common types:

1. Deferred Payment Plans:

There are a wide range of business-facing payment plan options out there. One of them is called a deferred payment plan. It simply means that as a business, you have an opportunity to delay the interest period and accrue interest later. Additionally, it is vital to note that these plans encourage customers to make payments in the deferred period without having to pay any interest. And, as a business, you get an advantage to meet your cash flow needs consistently. 

Pros:

  • Businesses can tailor the payment terms to suit both their needs and those of their customers.
  • Maintains a direct relationship with customers, enhancing loyalty and customer satisfaction.
  • They offer instant approval processes, creating more flexible opportunities.
  • Seamless integration with platforms ensures a smooth experience.

Cons:

  • High chances of interest charges accruing. This means that customers will end up paying more as the relaxation period comes to an end.

2. In-House Payment Plans:

In-house payment plans refer to a financing arrangement where businesses extend credit directly to their customers, bypassing external financial institutions. Essentially, it's a method where the business has complete control over setting the interest rate. 

Pros:

  • Direct Customer Relations: Enhances customer loyalty and retention.
  • Flexible Terms Control: Businesses set their payment terms.
  • Expanded Sales Opportunities: Attracts customers lacking traditional financing access.
  • Lower Processing Costs: Saves on fees typically paid to external institutions.

Cons:

  • Handling payments and billing requires good organization and effort.
  • Staff need to be trained to manage these payment systems, which costs time and money.
  • The business might not always get paid by customers, which is a risk they have to consider.

Broadly speaking, whether it's the business itself or third-party financing options, it's all about making it easier for people to buy what they need. But this comes with cons too, and to overcome those, so make sure you opt for a demo before deciding on a platform. Credee, in this case, provides an instant demo to businesses so that it's easier for them to make a decision.

Sum Up

Customer payment plans are not just an effective financial tool but a growth strategy for businesses. By breaking down barriers to purchase, these plans enhance customer satisfaction, and loyalty, and drive higher sales. Credee can help meet your requirements, offering seamless payment solutions, and featuring multilingual capabilities. So, go ahead and do your research, and opt for a solution that will you achieve your goals.

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FAQs

1. How Do Customer Payment Plans Differ From Traditional Financing?

Customer payment plans are more flexible, accessible to a broader range of customers, and easier to set up compared to traditional financing, which typically requires more paperwork and credit assessments.

2. Why Go for Customer Payment Plans?

Customer payment plans are a good strategy to increase sales, increase cash flow through the monthly flow of payments, and boost loyalty among customers as most payment plans come with flexible options to choose from. 

3. Why Choose Credee?

It stands out due to its no credit check payment plans & 97% approval rate, which is beneficial for customers with bad credit scores. This also leads to streamlined operations and stress-free experiences. 

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