Offering Payment Plans to Customers: A Comprehensive Guide

Customer financing has emerged as a crucial tool for businesses, allowing them to offer their customers flexible payment options for products, goods, or services. This financial program involves a structured payment plan that spreads the cost over a defined period, making purchases more accessible to a broader customer base.

Understanding Customer Financing

Customer financing is a service businesses provide to assist customers in paying for their purchases over time. Typically, it involves an application process where the customer’s creditworthiness is evaluated through a credit check. The financing can be divided into two main types: primary and secondary.

  • Primary Financing: This category considers a customer’s credit score and includes options like credit cards.
  • Secondary Financing: Unlike primary financing, this is open to all credit types and includes options such as lease-to-own arrangements.

By offering customer financing, businesses can attract a wider range of customers who may not be able to afford the full upfront cost of a product or service. It also opens up an additional payment avenue, potentially increasing sales. lets you offer payment plans to customers

Types of Customer Financing

1. In-House Financing

In-house financing involves a business acting as a creditor and offering its own financing program to customers. While it offers more control, it necessitates additional processes and responsibilities for the business, such as credit checks, payment collection, and account management.

2. Third-Party Financing

Third-party financing entails relying on external providers as lenders at the point of sale. Customers can enter payment plans to pay off the full purchase amount over time, usually through monthly payments. Third-party financing widens the range of approved credit compared to strict primary financing options. A popular example is the “buy now, pay later” model, often used by online retailers.

The fees associated with third-party financing apps typically include a fixed amount per transaction, like a fixed charge and a percentage of the sale, allowing businesses to handle credit checks and payment collection effortlessly.

Which Companies Offer Small Business Financing?

NameKey FeaturesRating– Same-day financing
– Transaction-based financing model
– Automated disbursements & repayments
– ‘Pay later’ financing options for customers – SmartPO technology for seamless purchase order integration
– Credit line grows with business expansion
Flexxbuy– Loans up to $50,000
– Quick approval for smaller loans
– Formal application process
– No pre-payment penalties
– Loan payback period: 12 months to a few years
– Tailored merchant costs
– Enrolment/setup fee for merchants
LendPro– Relationships with two dozen lenders
– Direct lending relationship with customers
– Integration of financing application software into websites
– Physical kiosks for in-person credit applications
– Limited details on contractual agreements and charges
Snap Financing– “Lease to own” model for substantial purchases
– Swift business funding within 2-3 days
– Lease term with options to purchase or return the item
– Ownership of the sales contract remains with the merchant during the leasing period
Affirm– Financing application integrated into various eCommerce platforms
– Loans financed by Cross River Bank and Celtic Bank
– Soft credit pull during application
– Flexible payment application methods
Afterpay– Focuses on financing lower-cost goods and services
– Integration with online shopping carts for installment payment options
– Soft credit pull during approval
– No interest or service fees – Flexibility for prepayment and early full payment

Struggling with cashflow gaps and the hassle of dealing with traditional banks? Say hello to seamless financing with! This platform not only enhances customers’ shopping experiences by offering ‘pay later’ options, but it also gives an immediate cash boost to your business.

How to offer payment plans to customers with cashflow buy now and pay later

Imagine an integrated system that grows with your business, syncing perfectly with every transaction. That’s SmartPO technology – making financing requests a breeze. No more juggling finances; focus on delivering with confidence while ensuring the credit line aligns with growth.

Cashflow's Smart PO technology

Selecting the perfect consumer financing platform is vital for your business. simplifies receivables, optimizes payables, and offers instant financing options. Experience improved cash flow and minimal delays with automated invoicing and tailored payment plans.

How to offer payment plans to customers

The user-friendly interface ensures a smooth transition and top-notch customer support is always available. With, financial efficiency and strategic growth are just a click away. The platform is a great option to empower your business with a secure, comprehensive, and scalable solution. Enhanced cash flow ensures operations run smoothly, enabling timely inventory restocking, robust marketing campaigns, and strategic investments.

Cashflow's buy now, pay later screen

With, your business can expand and capture opportunities that would otherwise slip away. Consumer financing catalyzes growth, attracting more customers and fostering brand loyalty.

Key Features:

  • Get funds on the same day you need them.
  • Receive funds based on transactions, improving cash flow.
  • Automated, hassle-free disbursements and repayments.


Flexxbuy operates within the traditional consumer lending sphere, boasting connections with over 20 lenders on its backend. This setup allows for swift and suitable lender matches based on a customer’s credit score. Customers using Flexxbuy can secure loans up to $50,000, with indications suggesting smaller loans may be approved instantly, while larger ones could take up to 48 hours.

The application process involves formal submissions by the merchant, ensuring transparency and clarity. Pre-payment incurs no penalties, and loan payback periods range from 12 months to a few years. The cost to the merchant is tailored and varies based on the collaborating lender. An enrollment/setup fee is applicable for merchant sign-ups.

Key Features:

  • Secure loans up to $50,000 quickly.
  • Tailored merchant costs for flexible financial arrangements.
  • Instant approval for smaller loans, aiding urgent needs.


LendPro follows a similar traditional lending approach to Flexxbuy, establishing relationships with more than two dozen lenders to provide financing across varying amounts and credit scores. The lending relationship directly involves the customer and LendPro. Integrating LendPro’s financing application software into the merchant’s website lets customers view financing options at checkout and proceed with applications.

Additionally, LendPro offers physical kiosks for in-person credit applications at brick-and-mortar stores. Their website does not provide details regarding contractual agreements and merchant charges.

Key Features:

  • Access a wide range of lenders for varied financing options.
  • Integrate financing seamlessly into your website.
  • Offer in-person credit applications for added accessibility.

Snap Financing

Snap Financing operates as a “lease to own” entity, primarily utilized for substantial purchases like furniture, electronics, and appliances. In this model, merchants send the merchandise to consumers, but the ownership remains with the merchant until the lease term concludes.

Customers can purchase the item outright or return it after the lease ends. The ownership of the sales contract appears to stay with the merchant even during the leasing period. Snap Financing ensures swift business funding within 2-3 days upon merchandise delivery.

Key Features:

  • Lease-to-own substantial purchases with flexibility.
  • Swift funding within 2-3 days of merchandise delivery.
  • Options to purchase or return items tailored to customers.


Affirm, founded by Max Levchin, a PayPal co-founder, stands out as a fintech company with robust backing from venture capital firms. Affirm primarily focuses on consumers and offers a seamless financing application integrated into various eCommerce platforms. The loans facilitated by Affirm are financed by Cross River Bank and Celtic Bank.

Noteworthy is the soft credit pull performed during the application process, with no specified loan limits. Payment application methods vary based on the purchase location, either directly at an affiliated online store or through a single-use virtual card for non-affiliated stores.

Key Features:

  • Seamlessly integrate financing into eCommerce platforms.
  • Choose flexible payment methods based on preference.
  • Trust in a reliable financing option with strong venture backing.


Afterpay, another fintech company, akin to Affirm, provides financing for relatively lower-cost goods and services. The merchant and buyer initiate the purchase, assigning the contract to Afterpay. The company handles payment-related inquiries, while merchants handle complaints and returns.

Afterpay integrates seamlessly with numerous online shopping carts, presenting consumers with installment payment options. A soft credit pull is executed during approval with no interest or service fees. Customers can prepay or pay in full before the due date, enhancing flexibility and convenience.

Key Features:

  • Finance lower-cost goods and services with ease.
  • Integrate installment options seamlessly into your online store.
  • Offer flexibility with prepayment and early payment choices.

Pros and Cons of Customer Financing


  • Increased Order Values: Customer financing often leads to higher average orders, boosting revenue and allowing customers to purchase desired products without financial strain.
  • Improved Working Capital: Offering payment plans can result in partial upfront payments, enhancing cash flow management and providing access to working capital.
  • Closing More Sales: Breaking down the cost with payment plans can make products more affordable, potentially resulting in more completed purchases.


  • Added Complexity: Implementing in-house financing adds administrative complexity, necessitating efficient bookkeeping and account management. QuickBooks can aid in automating recurring payments and managing invoicing.
  • Risk of Bad Debt: Offering financing entails non-payment risk, necessitating a robust collections policy to mitigate potential losses.
  • Minimums, Fees, and Expenses: Third-party financing often involves transaction fees and certain transaction amount requirements, impacting the business’s and customers’ costs.

How to Offer Payment Plans to Customers: Online vs. Brick-and-Mortar

An image showcasing consumers using payment plans

Deciding to provide financing options for your customers is a smart move to boost sales and cater to a wider audience. Whether you operate an online store, a physical brick-and-mortar store, or both, here’s how you can effectively communicate and implement customer financing:

Online Stores

  • Checkout Integration: Offer financing options seamlessly during the checkout process, along with traditional payment methods.
  • Ease of Application: Customers can click on a financing button, answer a few questions, and undergo a “soft” credit check.
  • Choice and Flexibility: Customers are given flexible financing choices, including the number of installments, installment amounts, and applicable interest or fees.
  • Quick Processing: Once customers select their preferred financing option, the online merchant is swiftly paid by the financing company, typically within a day or two after shipping.
  • Prominent Promotion: Utilize banners and buttons provided by financing companies to visibly announce financing availability on your website.

Brick-and-Mortar Stores

  • Diverse Application Methods: Provide customers with various ways to apply for financing, making the process accessible and convenient.
  • In-Store Kiosks: Consider having free-standing kiosks within your physical store where customers can easily apply for financing.
  • Tablet Applications: Load tablets with financing application software for a more interactive and straightforward application process, facilitated by store clerks.
  • Personalized Assistance: Train store clerks to assist customers in filling out financing applications, ensuring a smooth in-store experience.
  • Pre-Arranged Financing: Allow customers to pre-apply for a specific financing amount, and issue them a single-use virtual card for seamless transactions.
  • Internet Connection: Maintain an internet connection to facilitate real-time processing of financing applications and approvals.

How do I Evaluate Consumer Financing Providers?

Thoroughly vetting providers on these aspects will help you select the ideal partner that increases approvals and sales while minimizing costs and risks.

  1. Rates, fees, and revenue sharing structure: Understanding the interest rates, fees, and how revenue is shared between your business and the financing provider.
  2. Loan amounts and term lengths offered: Knowing the range of loan amounts and the durations for repayment that the financing provider offers to your customers.
  3. Credit approval policies and requirements: Familiarize yourself with the provider’s policies and criteria for approving credit to customers seeking financing.
  4. Fund disbursement timelines: Knowing how quickly the funds from approved loans are transferred to your business after a successful customer application.
  5. Customer service reputation: Assessing the provider’s track record in customer service to ensure they offer reliable support and assistance to your customers.
  6. Data security and privacy measures: Ensuring the provider has robust security measures in place to safeguard sensitive customer data and privacy.
  7. Integration with sales channels: Understanding how seamlessly the provider’s financing options integrate with your sales platforms or channels.
  8. Contract terms and cancellation policies: Reviewing the terms of the contract, including conditions for cancellation or modification, to align with your business needs and customer expectations.

Implementing Customer Financing: A Four-Step Process

1. Review Your Options

Evaluate whether in-house or third-party financing is suitable for your business based on your industry and customer preferences. Consider factors like interest rates, credit limits, and associated expenses.

2. Choose an Option

Based on your evaluation, select either in-house or third-party financing. If opting for in-house financing, create policies, credit application processes, and automate recurring payments. For third-party financing, integrate it seamlessly into the checkout process.

3. Implementation

For in-house financing, set up accounts receivable processes, credit systems, and payment terms. Integrate the option into your sales processes for third-party financing, including product and checkout pages.

4. Communicate with Customers

Market your financing options to customers through various channels like email marketing, website promotions, and social media. Ensure clear communication regarding the availability and benefits of financing options.

Key Considerations When Implementing Customer Financing

When implementing customer financing, here are some key factors to consider:

  • Customer eligibility: Establish clear credit score or income requirements to qualify customers for financing. More lenient policies expand your reach but increase risk.
  • Payment structure: Decide optimal payment timelines, down payment percentages, interest rates, and loan limits based on typical order values and profit margins.
  • Provider reputation: Research providers thoroughly and opt for an established company known for reliability, security, and customer service. This protects your brand reputation.
  • Integration: Choose a provider that seamlessly integrates financing options into your sales channels and POS system for a smooth checkout experience.
  • Costs: Compare provider fees and be sure financing revenue exceeds costs. Look for competitive, transparent pricing.
  • Promotion: Market financing prominently through multiple channels and train staff to communicate options. Highlight benefits like flexibility and savings.
  • Optimization: Use data and feedback to continuously improve your financing program. Identify opportunities to enhance the application process, increase approvals, and boost adoption.

By tailoring your approach based on your store type and integrating financing seamlessly, you’ll enhance the overall customer experience and drive sales growth.

How do I Encourage Customers to Use Financing?

To maximize the impact of offering customer financing, you must focus on driving awareness and adoption. Consumers are often simply unaware of financing options unless they are clearly displayed throughout the purchasing journey. Some effective strategies to help encourage the use of financing include:

  • Highlighting financing prominently throughout the customer journey
  • Training staff to proactively offer financing options
  • Providing perks or discounts for financing users
  • Optimizing the application process for higher approval rates
  • Offering incentives for customer referrals or reviews
  • Using messaging that reduces stigma around financing
  • Targeting high-value customers who benefit most from installments

Ultimately, prioritizing promotion, incentivization, and optimization will help normalize financing and make it a popular, mainstream payment choice.

In Conclusion

In the bustling world of retail today, providing customer financing stands out as an excellent choice for businesses. It’s a powerful tool to elevate sales and nurture customer loyalty. Whether online or in physical stores, the ability to provide flexible payment options is a significant competitive advantage. Customer financing allows businesses to extend their reach and cater to a broader customer base by alleviating the financial burden of large upfront payments.

By understanding the dynamic financing landscape and evaluating the offerings of various providers like, Flexxbuy, LendPro, Snap Financing, Affirm, and Afterpay, businesses can make informed choices that align with their objectives and customer needs.

From the seamless integration of financing options at the online checkout to the versatile approaches in physical stores, businesses can tailor their strategies to accommodate the diverse needs of their clientele. The goal is to facilitate purchases, enhance customer satisfaction, and drive sales growth.

Staying ahead in a constantly evolving market means embracing customer-centric solutions like financing. By doing so, businesses can establish trust, nurture long-term customer relationships, and ultimately, bolster their bottom line. As the retail landscape evolves, customer financing is a pivotal tool for businesses to adapt, thrive, and foster a loyal customer base. Check out the homepage to learn more about how to offer payment plans to customers.

Customer Financing FAQ

How does customer financing work for e-commerce?

For e-commerce, third-party financing partners offer installment loans or flexible online payment options like “buy now pay later.” These are integrated into the checkout process.

What are the main types of customer financing?

The two main types are in-house financing provided directly by the business and third-party financing through external lending partners. Both include options like installment loans and store credit cards.

What are the costs of offering customer financing?

Third-party providers typically charge a flat transaction fee and a percentage of the purchase amount. Flat monthly fees may also apply. In-house financing costs include administrative expenses, bad debt, and reduced cash flow.

What are the key benefits of customer financing?

In conclusion, offering customer financing can greatly benefit both businesses and their customers. Carefully evaluating the pros, cons, and options will allow you to implement an optimal financing program.