The Plug

Offering flexible payment options can be a powerful strategy for closing more sales and boosting order values. Many customers prefer to break up payments over time rather than pay lump sums upfront.

This guide will explore the most effective financing models small businesses can offer to make purchases more affordable for customers and entice larger orders.

We’ll cover:

  • Types of financing like installment plans and revolving credit
  • Top payment plan providers to use
  • Best practices for integrating financing
  • Considerations around credit checks and approvals
  • Tips for marketing financing programs

Read on to determine which financing strategies make the most sense to help sell more and improve cash flow.

Why Offer Financing for Customers?

Here are some of the key reasons small businesses should consider offering financing programs:

Increase Sales Conversions

Letting customers divide payments over months or years instead of 100% upfront can encourage larger purchase decisions. Offering financing boosts your close rates.

Unlock Larger Order Values

When customers can finance larger purchases over time, their average order values increase. Monthly payments seem more affordable than big one-time sums.

Compete Against Larger Retailers

Major retailers often offer credit cards and financing. Offering payment plans levels the playing field for small businesses to compete.

Manage Cash Flow

Installment plans mean you receive revenue over months instead of a lump sum. This can smooth out uneven cash flows for businesses with sporadic sales.

Attract Younger Buyers

Millennials and Gen Z are used to subscription models. Installment payments align better with these demographics’ preferences.

Providing the right financing experience caters to customer payment preferences while benefiting your sales process.

Types of Financing to Offer Customers

If you decide to offer financing, here are some models to consider:

Installment Loans

With installment loans, customers pay off a fixed-price purchase in equal monthly installments over 3, 6, 12+ months. Simple and predictable.

Revolving Credit Lines

A revolving credit line allows customers to finance up to a certain limit, then pay off the balance monthly like a credit card. Provides ongoing flexibility.


Rent-to-own allows trying products by making regular payments, a portion of which eventually goes towards full ownership. Useful for big ticket items.

Layaway Programs

Layaway allows customers to reserve items by putting down a percentage as a deposit then pay the balance off in installments over weeks or months before taking ownership.

Each model offers unique advantages. Evaluate their pros and cons for your specific business.

Top Financing Providers for Small Businesses

Reputable third-party financing companies can quickly get you setup offering payment plans with minimal effort or risk. Here are some top options:

1. Affirm

Affirm provides customizable installment plans and revolving lines of credit. Used by over 12,000 merchants.

Key Features:

  • 0-30% APR financing terms
  • Flexible loan amounts from $50-$17,500
  • Branded checkout experience
  • Handle credit applications and underwriting
  • Integration with popular ecommerce platforms


  • Merchant fee of 3-8% of purchase price
  • 0-30% APR passed to customers

Best For: Larger purchases, higher priced products

2. Afterpay

Afterpay offers interest-free installments over 6 weeks with minimal integration work for merchants.

Key Features:

  • Pay in 4 interest-free payments automatically every 2 weeks
  • $50 billion+ in annual payments processed
  • Minimal integration – just two easy API calls
  • Afterpay handles all repayments from consumer
  • No credit checks required for customers


  • Merchant fee of 4-6% of order value
  • No interest charged on consumers

Best For: Fashion, beauty, lifestyle, sporting goods, electronics, etc.

3. Quadpay

Quadpay breaks purchases into 4 interest-free installments paid every 2 weeks. Used by over 40,000 merchants.

Key Features:

  • 4 payments over 6 weeks
  • Instant checkout conversion – no redirect to applications
  • $10 billion+ in annual payments processed
  • No hard credit check required
  • Branded checkout option to promote financing


  • Single merchant fee of 2.9-5.5% order value
  • No interest or hidden fees for customers

Best For: Any online/in-store retailers

4. Sezzle

Sezzle allows customers to split purchases into 4 interest-free installments. Over 44,000+ active merchants.

Key Features:

  • Pay in 4 installments every 2 weeks
  • Qualification based on bank account verification – no credit impact
  • Increase conversion 10-30%
  • Branded digital card customers can use to spread costs
  • Add Sezzle’s payment widget at checkout


  • Merchant fee of 5-8% of order value
  • Customers are not charged interest

Best For: DTC fashion, beauty, apparel, sporting goods, furniture

5. Klarna

Klarna offers interest free short term financing and pay later options. Over 250,000 global merchants use Klarna.

Key Features:

  • Pay now, pay later, pay in 4, and financing options
  • Fast one-line integration and pre-built templates
  • Increase average order value 20-30%
  • Branded shopping experience
  • Handle all credit applications and underwriting


  • Merchant fees average around 3-5% based on product vertical
  • Customers may pay 0-30% APR depending on credit

Best For: Large ticket purchases like appliances, electronics, furniture, travel

This covers some of the most widely used SMB financing providers. Make sure to compare options within your niche.

Key Steps to Offer Financing in Your Business

Follow this framework to effectively integrate financing:

1. Decide on financing models

Select which options fit your business model and average order value based on what customers want. Installment plans? Revolving credit?

2. Research plan providers

Vet providers like Affirm on integration complexity, flexible options, underwriting, and branding experience.

3. Choose provider(s)

Select financing partners that align with your business needs, tech stack, and customer demographics.

4. Integrate into checkout

Follow provider guides to integrate their financing products into your online or in-store checkout flow.

5. Train staff

Educate sales team on promoting financing options intelligently to increase order values.

6. Market the offering

Let customers know financing is available through website, product pages, shopping cart, etc.

With the right prep work, integrating financing can be straightforward for SMBs.

Should You Offer In-House Financing?

Offering financing directly instead of using a third-party provider does enable keeping all interest payments in-house – but also comes with a few downsides:


  • Avoid paying provider merchant fees
  • Keep all interest paid by customers
  • Full control over program policies


  • Takes significant effort and overhead to manage
  • Need processes for credit checks, approvals, payment collection
  • Higher risks being directly responsible for defaults and delinquencies
  • No existing brand recognition or trust with customers
  • Less financing experience than mature providers

Unless your business is already highly equipped to manage financing and credit administration, it typically makes sense to use established providers. The infrastructure is already built for you.

Tips for Offering Financing Successfully

Here are some best practices to follow when offering financing:

  • Present payment plans at the start of the sales process – not the end
  • Train sales team on when and how to bring up financing appropriately
  • Educate on the full purchase price, not just monthly payments
  • Disclose APRs and interest clearly if applicable
  • Highlight financing providers known and trusted by customers
  • Test pricing various monthly payment plans to balance affordability and profitability
  • Monitor performance metrics – utilization, orders, conversions, etc
  • Promote financing availability prominently where customers are purchasing

Getting the experience right for customers and employees ensures your financing program succeeds.

Offering Financing for High Ticket Purchases

Financing shine for big ticket purchases customers can’t easily put on a credit card. Tactics include:

  • Educate customers upfront on all financing options and terms
  • Walk through cost comparisons – monthly payments, interest, total paid, etc
  • Offer tailored installment loan amounts and terms based on purchase prices
  • Provide quick credit decisions to keep sales moving
  • Offer low introductory rates if possible to incentivize sign up
  • Highlight any introductory perks like deferred interest promotions
  • Bundle warranties, assembly, accessories into loan if advantageous

For large purchases like furniture and appliances, financing often makes or breaks the sale. Make sure the experience is smooth.

Should You Perform Credit Checks on Customers?

Many financing providers handle credit checks and approvals on your behalf. But if you offer in-house plans, here are factors to decide whether customers should undergo credit screening:

Consider checking for:

  • Financing above a certain $ threshold
  • Customers you haven’t worked with previously
  • Plans longer than 12-24 month terms
  • Products at higher risk of defaults like electronics

May not need checks for:

  • Customers with long positive purchase history
  • Smaller financing amounts below $500
  • Short term 6 month or less plans
  • Repeat or subscription purchases
  • If you already have payment card on file

Use common sense based on purchase costs, risks, and customer relationships. Don’t make financing too rigid or intimidating.

Explaining Affordable Payment Options to Customers

Some tips for sales reps explaining financing options:

  • Present payment plans early as a normal purchase option
  • Avoid perceptions of only offering financing due to unaffordability
  • Focus on cash flow flexibility and breaking payments into digestible amounts
  • Use visual aids showing total costs vs monthly payments
  • Highlight top features and benefits monthly payments provide
  • Make the application and approval process sound quick and easy

With the right scripting and training, staff can seamlessly present financing in a positive light.

Marketing Your Financing Offers

Promote financing availability through:

  • Your website financing/payment FAQ page
  • Product and cart pages
  • Checkout workflows
  • Online ads and mailers
  • Social media posts
  • Email sequences and nurture tracks
  • Signage in physical stores
  • Staff mentioning financing upfront
  • Dedicated sections on financing in sales collateral

Reminding customers consistently that financing is available makes it top-of-mind during their purchase process.

Should You Offer Financing for Services?

Financing typically focuses on tangible products. But some creative ways service companies could offer payment plans:

  • Break a large consulting engagement into milestones
  • Offer packages of 10 personal training sessions financed monthly
  • Allow patients to finance expensive dental treatments over time
  • Let clients pay deposits upfront then finance remainder
  • Provide subscriptions for monthly access to software or updates

With the right structure, customers can digest paying for big services incrementally.

Evaluating Financing Program Success

Key metrics to track financing performance:

  • Financing attachment/penetration rate
  • Average order values for financed sales vs all sales
  • Incremental revenue directly attributed to offering financing
  • Increase in conversion rates when financing is presented
  • Response rates to financing marketing across channels
  • Customer satisfaction with financing experience
  • Defaults and delinquencies rates

Analyze metrics to fine tune your program, maximize upside, and minimize risks.

The Bottom Line

The major takeaways around offering customer financing:

  • Flexible payment options like installment plans help close more sales.
  • Third-party financing providers make rollout easy with little effort or risk.
  • Integrate financing seamlessly into your existing checkout workflows.
  • Train staff to present payment plans to customers appropriately.
  • Use financing to unlock larger order values and purchases.
  • Promote financing availability prominently across channels.
  • Monitor performance closely and tweak the program over time as needed.

With the right approach, financing allows businesses to cater to customer payment preferences while increasing revenues. Just make sure execution and promotion is thoughtful.


  • Sarah Teague

    Sarah Teague brings 5 years of professional writing experience to her role as content writer for Walletminded. In this position, Sarah creates compelling articles, blog posts, and other digital content that engage readers and promote the Walletminded brand. Before joining Walletminded, Sarah honed her writing skills as a freelance writer and ghostwriter. Her work included crafting blog posts and web content for financial services, technology, and healthcare clients. Sarah holds a bachelor's degree in English from Emory University, where she also served as editor of the campus literary journal. She continues to volunteer her time as a writing mentor for youth in her community. When she's not meticulously crafting content, you can find Sarah attempting new baking recipes and enjoying hikes with her dog. She also loves curling up with a good memoir.

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