Why And How To Offer Payment Plans To Customers

"Do you offer payment plans?" is a question that businesses encounter more frequently from customers than you might expect. And if you haven't heard it yet, it won't be long before you do.

Let’s be realistic: with rising expenses, many people are facing tighter budgets, which affects their spending habits. For businesses offering products or services that aren’t necessities but aren’t exactly luxuries either, this can lead to a slowdown in sales. Customers may want your offerings but simply can’t afford them upfront. Payment plans can change that, turning things around for your business, and allowing you to expand it beyond the limits set by unaffordability.

So, it's about time you explore customer payment plans and decide on a way to offer payment plans to customers that suit your business best. Let’s get right to it.

What Are Payment Plans?

Put simply, payment plans are payment structures that businesses offer customers to allow them to pay for products or services gradually. So, instead of having them pay the total cost up front, you agree to let your customers pay smaller amounts over a set period. This makes it easier for them to afford your products or services, and eventually means more business for you.

Why Offer Payment Plans?

If you’re wondering, besides the goodwill attached to offering underserved customers payment plans, what are the benefits for business owners, you’d be glad to know there are quite a few. Let’s go over the most promising ones.

Benefits Of Offering Payment Plans

Benefit	To Elaborate
Increased Sales	Payment plans make products or services more affordable, leading to higher sales volumes.
Attracting New Customers	Offering payment flexibility appeals to a broader audience, including those who might not afford a full upfront payment.
Improved Cash Flow	Regular installment payments can provide a steady and predictable income stream, aiding in cash flow management.
Competitive Advantage	Payment plans can differentiate your business from competitors, making your offerings more attractive.
Customer Loyalty	Providing flexible payment options can enhance customer satisfaction and loyalty, encouraging repeat business.
Higher Conversion Rates	Customers are more likely to complete a purchase when they have the option to pay over time, reducing cart abandonment.
Larger Average Order Value	Customers might purchase more or upgrade to higher-priced items when they can spread the cost over time.
Reduced Price Sensitivity	Payment plans help mitigate price objections, allowing customers to focus on the product's value rather than the cost.
Enhanced Customer Relationships	Offering payment flexibility shows understanding and accommodation of customers' financial situations, fostering trust and goodwill.
Access To Different Markets	Payment plans can open up opportunities to sell in markets where consumers prefer or require financing options.
Serving The Underserved	Payment plans enable you to reach underserved populations who may not have access to traditional credit or financing options, allowing them to access essential products or services.

Now that you know the answers to “What are customer payment plans?” and how offering a customer a payment plan for a purchase can benefit you, what next? Where do you start? Should you offer payment plans for customers all on your own, look for an agency that manages payment plans for business, or consider payment plan software? It can be confusing, and making an informed decision is imperative. After all, it’s crucial to the outcome. Let’s go over the top options to consider when deciding how to offer payment plans to customers.

How To Offer Payment Plans To Customers

First Option: Take Charge Of It On Your Own

Scenario: You're a small business owner who decides to handle payment plans internally. You set up a system to offer flexible payment options to your customers directly.

Example:

- Process: Create a customized payment plan option on your website. You manually track payments and send reminders.

- Implementation: Use your own invoicing system to set up monthly payments. For instance, a $600 product could be paid at $200 per month over three months.

- Features To Consider: Ensure a secure system for handling payments and customer data. Offer a clear agreement outlining payment terms.

Risks To Consider:

- Administrative Burden: Handling payment plans yourself can be time-consuming, requiring you to manage billing, track payments, and resolve issues.

- Potential Errors: Manual tracking increases the risk of errors in payments and invoicing, which can lead to disputes or customer dissatisfaction.

- Cash Flow Management: If not properly managed, offering payment plans could impact your cash flow, especially if a significant portion of your revenue is tied up in unpaid installments.

Option Two: Hire A Middleman

Scenario: You opt to hire a specialized agency to handle payment plans. The agency manages all aspects of the payment process, allowing you to focus on your core business.

Example:

- Process: Partner with a financial services agency that specializes in payment solutions. They set up and manage payment plans, including customer outreach and payment processing.

- Implementation: The agency integrates a payment plan option into your website, handling customer service and payment collections. For example, a $1,200 service might have the option to pay $100 per month for 12 months.

- Features To Consider: Choose an agency with industry experience, transparent pricing, and reliable support.

Risks To Consider:

- Cost: Agencies may charge significant fees or commissions for their services, which could impact your profit margins.

- Dependence: Relying on an external agency means you depend on their performance and reliability. Issues with the agency can affect your business operations.

- Less Control: You may have less direct control over the customer experience and payment process, potentially leading to misaligned service standards.

Option Three: Do It Yourself Through A Facilitator Like Credee

Scenario: Use a facilitator like Credee to offer flexible payment plans. Credee provides a balanced solution with built-in features that simplify the process for you and your customers.

Example:

- Process: Integrate Credee into your website. Credee handles the setup of payment plans, automates collections, and manages customer interactions.

- Implementation: Customers purchasing a $500 product can choose a plan to pay $100 per month for five months. Credee offers seamless integration, multilingual support, and flexible plans without credit checks. The 97% approval rate increases customer access.

- Features To Consider: Automated payment processing, multilingual support, and easy website integration enhance the customer experience.

Risks To Consider:

- Minor Setup Adjustments: There may be minor tweaks needed during initial setup, but these are usually straightforward and quickly resolved.

- Small Fee Variations: Service fees from Credee might vary slightly based on transaction volume or specific plan features, but these variations are typically minimal and manageable.

- Occasional Customer Queries: Some customers might have brief questions about the new payment options, but these are usually easy to address and don’t significantly impact overall operations.

Each option has its own set of risks and benefits, so consider your business needs, resources, and customer expectations when choosing the best approach for offering payment plans.

Let’s Compare All Your Options

Aspect	Taking It Upon Yourself	Relying On a Middleman	DIY Through a Facilitator (e.g., Credee)
Control	High	Moderate	Moderate
Setup Complexity	High	Moderate	Low
Administrative Burden	High	Low	Very Low
Cost	Low	Medium	Medium to High
Customer Experience	Direct	Professional	Streamlined
Payment Processing	Manual	Managed	Automated
Risk of Errors	Higher	Lower	Very Low
Approval Rate	N/A	N/A	High
Flexibility	High	Moderate	High
Customer Accessibility	Standard	Standard	High

Now, you should be able to make a choice without much hesitation. Moreover, how you want to offer payment plans is not a one time decision. So, feel free to test and try different options until you find the one that best suits your business’s needs and goals.

Conclusion

Offering payment plans can significantly contribute to the growth of your business by making your products or services more accessible and appealing to a broader range of customers. Whether you choose to handle payment plans internally, rely on a middleman, or use a facilitator like Credee, each option presents distinct advantages and considerations. By carefully evaluating your business needs, resources, and customer preferences, you can select the approach that best aligns with your goals.

Frequently Asked Questions On Payment Plans For Business

1. What Are Customer Payment Plans, And How Do They Benefit My Business?

In simple terms, customer payment plans let customers pay for a service or product over time instead of having to pay a lump sum amount upfront. This not only benefits customers, but also businesses like yours as they boost sales by making your products or services more affordable and attracting more customers than ever.

2. What Steps Should I Follow For Offering A Customer A Payment Plan For A Purchase?

- Understand the customer’s needs
- Offer flexible and clear payment plans
- Ensure the customer fully understands the payment schedule, interest rates, and any fees.
- Reach a mutual understanding of the terms with the customer.
- Monitor payments regularly and send reminders as needed.

3. Can I Manage Payment Plans For Customers Efficiently With Credee?

Yes, Credee’s platform allows for easy tracking and management of customer payment plans.

4. How Does Offering Payment Plans For Business Improve Customer Acquisition?

Payment plans lower upfront costs, making your offerings more attractive and helping you reach more customers.