With the current cost concerns in the UK, the average homeowner is looking for ways to tighten their purse strings whilst simultaneously finding ways to improve their asset's value. As times are getting harder and money isn't going as far, customers are being extra careful where they put their money, and large, one-off renovation projects could be a place they start to avoid.
In today's world of technology, financial instruments and offers, trade businesses may have a credible solution to their customers' cost woes by offering payment plans that spread the cost to sidestep a lump sum.
Let's spend five minutes exploring why your business should consider more ways for your clients to pay their bills, which can ultimately help you grow your business and appeal to more people.
What is the advantage for your business of offering payment plans?
Research has shown that around 25% of UK trade businesses offer their customers a payment plan option. On top, one in five firms believes offering better payment options helps secure more business.
Offering your customers flexible payment options is a great idea to help ease the ongoing economic strains within society. Of course, demand within the industry is booming, but you should never rest on your laurels. You should always look for ways to improve your business processes and positively impact customers.
Tradesmen and women who offer payment plans can encourage clients who are hesitant to have a large job done. For example, if a customer needs a vital job like a boiler replacement, not every client has the ability to fork out between three and five thousand pounds.
Are there any risks associated with these plans?
For trade businesses looking to offer payment plans, you best check on the health of your finances first; otherwise, you may land in hot water. Risks can present themselves if you expose yourself to too much financial lending, meaning problems can arise with cash flow, recovery, and debt write-offs.
On top, you must be aware of any costs involved with chasing up debt repayments and then factor in what this total would be if you received no money at the end of the matter.
Read more tips and tricks to offering better service in your trade business here.
How can your trade business protect itself from these risks?
To protect yourself against situations like these arising, your best course of action is to ensure you have rock-solid contracts with your customers in place or have payment plans that are financially protected.
Another way to protect against payment plan issues is by speaking to your trade contacts and asking who they offer finance through. More often than not, tradespeople follow a similar funding route as a car dealership - by outsourcing the process to a professional payment provider. This allows you to focus on your work while the pros handle payments and any customer issues.
Financial feasibility
When deciding whether or not to offer payment terms as part of your trade business, you must assess the viability and risk they pose to your finances. Your first step should be to see whether you can cover the costs needed to provide any financial plans and ensure that payment terms don't negatively affect your business.
Legal compliance
Any payment plan you decide on must match your business's compliance levels. This means that it must comply with laws and regulations set in the UK that provide conditions that protect the customer from taking out the policy. To be compliant, plans will usually involve consumer protection laws, debt collection laws and truth-in-lending laws. If you decide to outsource this process, the supplier will inform you of all these areas; however, if you are setting the process up yourself, you must ensure the plan falls under the FCA (Financial Conduct Authority).
Terms and conditions
For any transactions that include a payment plan, your business must define the terms and conditions for customers. This will include information on who the agreement is between, what date the payments are due, the amount owed, the interest rate and any fees for late payments etc.
Correct processes
Once you decide on how to offer payment terms, tradespeople need to create a process for payments from your customers. This will include a method for tracking and triggering payments from accounts provided by the customers. As we mentioned above, outsourcing your payment plans will mean that a third party takes care of the payments.
Payment collection system
After setting up your processes for receiving payment, you also need to consider what routes to take to chase customer debts. If a payment plan you offer goes south, then knowing the steps you need to take to ensure your business collects its debts or how to take a case to court is vital to keeping your business in good health.
Communications
Once all of the above is sorted, you must think of ways to inform potential customers that you offer payment plans to encourage them to use your business. This can be as simple as telling them when you conduct a quote or by advertising it on your van, social media channels, or in local leaflets/ newspapers. Be sure to include details on the payment plans, such as durations and interest levels.
On top of offering payment terms to help your customers manage their finances, you should also consider your business's cash flow. To help, we provide affordable trade insurance policies with interest-free monthly payments available. Whatever your requirements, we can create a policy that matches your needs, so contact Rhino today at 0116 243 7904.
Whether searching for Public Liability, Employers' Liability, Tool Cover, Legal Protection, Accident Insurance or more, we have everything you need under one roof. Get a price in just a minute by visiting our online shop here.
Confused about Public Liability Insurance? We’ve got you covered. Learn how this essential policy protects your business from accidental damage and injuries, why it’s important, and how you can get affordable cover tailored to your trade with Rhino Trade Insurance.
In this guide, we'll delve into the risks shopfitters face, explore the types of insurance that can offer protection and explain why many shopfitters trust Rhino Trade Insurance with their business needs.
Are you a carpet fitter? Do you work for yourself? If the answer to both those questions is yes, put down whatever you’re doing and keep reading. Your business will thank you for it.
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