How to Offer Consumer Financing Without Losing Cash Flow

Offering credit to your customers can be a powerful way to charge up your business receipts, but it can also be expensive. Since credit necessarily involves parting with inventory and taking payment later, it can put you into a cash flow crunch if you have too much outstanding credit to customers and not enough cash coming in to cover vendor payments and other expenses. Consumer finance programs represent an opportunity to extend that credit without compromising your own cash flow. They do that by partnering your business with a lender who can finance the program and help with management. All you need to do is process the applications and work with the program.

These finance programs have become very popular, because the access to an investor who can keep your money coming by providing a credit structure like a store card or store credit line you can process as payment. Depending on the deal you have with the company, you may receive some or all the transaction value deposited with your regular credit receipts through your merchant account. Each program is structured a little differently, so you will want to make sure you do the right research to find the program that fits your needs.

Consumer finance programs can afford to work with your business this way because their main business is financing, so they have the cash reserves and other financial tools necessary to hold the kind of debt that accrues from having hundreds or even thousands of merchant partners they extend credit through. Programs have sprung up to cater to specific industries, but there are also a lot of one-size fits all options with good program specifications and payment cycles.

Offering credit does not have to be a business opportunity that carries a lot of risk, and it also doesn’t have to be limited to the biggest and most established stores. You can work with a financing company to make it a reality for your business, even if you are not in retail. Not only are these programs popular with health care businesses and contractor services, they are gaining popularity with private clubs and schools who need a way to provide parents with a tuition payment plan that doesn’t compromise their own cash flow.

If you are looking for affordable ways to extend your customers credit, consumer finance programs hold the answer. Start researching your options today.

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