How Consumer Credit Benefits Small Businesses
Having the ability to offer credit to your customers empowers small businesses, but you need to find the right provider to get the most benefit from it. That’s where managed consumer credit programs come in. Unlike traditional methods of extending credit to customers, which are often difficult to manage for companies and affect their cash flow, managed programs have built-in merchant protections that help to make them low-risk for you while keeping them competitive and enticing for your customers.
Increased Sales and Repeat Business
The two things most merchants notice when they start to offer credit is that their sales rates increase, with more customers coming in and leaving with a purchase, and also that they see more of the same customers. Both of these phenomena are actually unsurprising once you look into the habits people form around credit. First and foremost, having access to the ability to pay later makes it easier to give in to impulse and spend. That increases the likelihood of sales on its own, but the flip side is that for more cautious consumers, it encourages sales by offering a plan with a clear way forward, so it does not just depend on enthusiasm, and that makes it an easier sell to a larger number of customers.
The second point, repeat business, is a huge factor in the benefits of these programs as well. Since most of them offer programs like six months same as cash for purchases, it is possible to stage in purchases in ways that encourage consumers to buy before they have totally paid off previous purchases, or at least to return as soon as they have. It also helps that when you offer consumer credit, it is specific to your storefront and therefore only useful with your company. That also helps to ensure repeat business, because the convenience of having a credit plan in place at your business will pull them back more often.
Managing Debt Portfolios and Setting Interest Rates
The two things that make credit offerings difficult are interest and collections, and the good part about most consumer programs is that these are not your issue once you are set up and going. More and more providers are not only setting the terms for interest and doing billing, both of which are quite common, but also offering to handle collection on bad portfolios, ensuring you get paid without sinking extra expenses into recovering your money.
With the range of advantages available and the opportunity consumer credit programs offer to grow your business, it is easy to see why adding the option for in-house credit benefits just about any business that makes sales or provides services to the public.