- WHAT IS THE VALUE OF A CUSTOMER?
- DOES CONTENT MARKETING WORK?
- WHAT IS THE DIFFERENCE BETWEEN A BRAND, BRANDING, A PERSONAL BRAND AND A COMPANY/PRODUCT NAME?
- WHAT IS GROWTH HACKING?
- HOW MANY « P » CAN BE FOUND IN THE MARKETING MIX?
- THE CUSTOMER VALUE CHAIN
- HOW CAN YOU PROTECT YOUR UNIQUE PRODUCT OR SERVICE?
- CONFERENCE ON FINANCING - MAY 2, 2017
- WHAT IS DRIP PRICING?
- WHICH AMOUNT SHOULD YOU CHOOSE FOR YOUR PRICES?
- DETERMINING YOUR HOURLY RATE BASED ON THE VALUE YOU THINK YOU HAVE
- IS LOWERING YOUR PRICES A GOOD IDEA?
- TO OFFER OR NOT TO OFFER FINANCING?
- HOW TO PROTECT YOURSELF AGAINST EXCHANGE RATE RISKS
- WHEN IS A GOOD TIME TO INCREASE YOUR PRICES?
- DEMAND BASED PRICING
- WHAT IS A LOSS LEADER?
- HOW TO ORGANIZE A DRAW THE RIGHT WAY?
- HOW TO HAVE REMOTE EMPLOYEES
- IS IT GOOD TO BE FIRST IN A MARKET?
- THE THREE TYPES OF CUSTOMERS
- EXPORTING TO MEXICO - QUERETARO REGION
- DEFINING BUSINESS SUCCESS
- ARE YOU USING REBATES? WATCH OUT FOR THESE
- IS THE CUSTOMER ALWAYS RIGHT?
- EXPORTS AND QUEBEC COMPANIES
- COWORKING SPACES
- YOUR PLACE OF BUSINESS AND INTERNET
- WHY IS SOCIAL MEDIA IMPORTANT FOR YOUR BUSINESS?
- HOW TO USE FREEBIES
- WHAT IS THE MAGICAL FORMULA FOR HAVING SUCCESS IN BUSINESS?
- DO YOU HAVE EXPERIENCE IN MY FIELD?
- WHEN CAN WE STOP OUR MARKETING?
- WHAT IS A CALL TO ACTION?
- WE ARE ALL SALESPEOPLE; HERE'S HOW TO GET THERE
- HOW CAN MARKETING AND SALES COLLABORATE?
- HOW TO SELL MORE TO YOUR EXISTING CLIENTS
- WHAT IS CROSS-MARKETING?
- WHY SHOULD I SEGMENT?
- WHO IS RESPONSIBLE FOR MANAGING YOUR COMPANY'S IMAGE?
- HOW TO CHARGE FOR YOUR PRODUCTS / SERVICES?
- HOW TO DEFINE YOUR PRICING STRATEGY: PRICE POSITIONING
- HOW TO DEFINE YOUR PRICING STRATEGY: MARKET PRICING
- WHAT PRICE SHOULD YOU SELL AT? - COST-BASED PRICING
- WHAT IS A PRODUCT?
- HOW TO MARKET YOUR NEW BUSINESS?
- IS BUYING A FRANCHISE A GOOD WAY TO START A BUSINESS?
- HOW SOCIAL MEDIA HAS CHANGED WORD-OF-MOUTH
- HOW SOCIAL MEDIA HAS CHANGED PUBLIC RELATIONS
- WHAT IS BRANDING?
- WHY INCREASING SALES IS NOT THE SOLUTION
- HOW TO SELECT YOUR COMPANY NAME?
- WHY HAVING A WEBSITE IS ONLY THE BEGINNING?
- WHAT IS MARKETING?
- HOW TO MAXIMIZE THE VALUE OF YOUR SOLE PROPRIETORSHIP BUSINESS
- WHY SELLING IN MEXICO?
- LOW COST MARKETING INITIATIVES
- WHY IS PRODUCT DIFFERENCIATION IMPORTANT?
- hOW TO PRESENT OUR COMPANY
- WHAT IS THE DIFFERENCE BETWEEN MARKETING AND PUBLICITY?
- 50% OF YOUR ADVERTISING BUDGET DOES NOT PRODUCE AS MUCH AS THE REST
- RIGHT SELL AND OVER DELIVER
TO OFFER OR NOT TO OFFER FINANCING?
There are several forms of financing that a company can offer to its customers. Is that a good idea? It depends on several factors. Here are some of the questions you need to ask yourself to find out if offering financing is right for you: Do you sell high priced items? Do you have a low or high profit margin? Does the customer leave with the product/service before paying the full amount?
Depending on the answers to these questions, here are a few options that you can offer:
- Credit card payments. This is a convenient form of financing that many companies offer without asking a few questions first. Who wants to pay cash? Your clients have to make a detour to the bank to make a withdrawal. But there is a cost associated with offering this convenience to your clients. Depending on the fees offered by banks and other payment services, this service can cost you between 1.5-4% per transaction. If you can afford it; go ahead, your customers will be happy. If your margins are low, debit card payment is an alternative. There are still costs, but they are more modest. To see the debit card pricing in Canada, click here.
- If you are selling high priced items and the customer leaves with the product/service before having paid the entirety of the purchase, then financing is essential. A few examples of industries that may use this payment option are: furniture or appliance stores, recreational vehicle dealers, renovation project contractors. Doing business with a company that is specialized in this kind of transaction is very important. There will be fees. But if you are not in the financing world, you will avoid mistakes, expenses, and reduce the risk associated with mismanagement of financing purchases.
Here are three types of financing that companies can offer themselves: 30 days’ net payments, splitting a project into milestone payments and a layaway plan.
Net 30 days financing is often associated with a discount for immediate payment. In my experience what I see most often is a 2% reduction for immediate payment. This kind of financing/rebate is offered to encourage quick payment and thus avoid the costs associated with reduced cash flow. If your customer pays you quickly, you have a larger cashflow which can be used to maximize your profits.
The other “financing” option is rather a different way of doing things that limits the risks associated with a large project involving a single payment. The idea is to split the project into intermediate milestones and corresponding payments. Thus you reduce the risk associated with non-payment and you can make the decision whether to continue with the project if a payment does not come on time. Computer companies, renovation project companies, and similar operations, are excellent candidates for this kind of approach. Of course this does not eliminate all the risks, but it reduces the impact that a non-payment might have on your overall operation.
The last option we will see here is the layaway plan. Strictly speaking it is not a form of financing, but this option helps the client to obtain goods/services that he/she would not be able to obtain otherwise. The strategy is for a customer to be able to reserve a good or service by making a deposit, followed by a series of payments until the full amount has been paid. As a retailer, you reduce your risk because the product does not leave your store until the full amount has been paid. But your policies must be clear; eg how long can the buyer make payments? What happens to the product if only partial payments have been made? Would you charge storage fees? Etc... Several retail operations offer this way of doing things.
Should you offer financing or not? The decision is yours, but at least with this article you have a basis for asking yourself the right questions.
If you have any questions or comments, do not hesitate to contact me.
Stéphane Elmaleh-Riel, B.Ed., MBA