Customer financing is a way to let customers pay for goods or services in installments instead of upfront. When you offer financing to your customers, you make your services more affordable and put their dream jobs within reach.

Best of all, while customers pay over time, you get paid in full as soon as the job is complete. It’s a great way to increase sales and impress your customers without sacrificing your cash flow.

Service businesses in industries such as HVAC, plumbing, electrical, and tree care offer financing to customers because it helps them:

  • Look more professional and stand out from the competition
  • Remove barriers that stop clients from accepting a quote
  • Win more jobs, close bigger deals, and make it easier to upsell
  • Increase sales by up to 20% 

Read on to learn more about consumer financing, how much it costs, and how to offer financing to your customers.

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What is customer financing?

Customer financing, or consumer financing, is a way to let customers pay for a product or service over time, instead of upfront. It gives your customers options when they want a service, but can’t afford the whole price upfront. For example, an HVAC job that would cost $1,500 can be paid in five monthly installments of $300.

By offering customer financing, service businesses can secure more and bigger jobs. Meanwhile, customers can get the service they need, faster.

The biggest benefit of customer financing is that it helps increase your average ticket price and remove barriers to sales. We studied price estimates with and without financing and found that offering financing typically increases sales by 20%.

HVAC service business estimate with consumer financing offer

“My customer was extremely grateful to have this consumer financing option. The repair came at a really bad time for her, and she was left with a really good feeling. It’s an amazingly easy process, too.”

– Jeff Kerr, Marlin Wastewater Services

Offering financing to customers: Is it right for me?

Customer financing isn’t suitable for every service-based business. Here are some ways to tell if it can help you increase sales:

  • You offer services at a high price point. If your average service costs $500-$1,500, offering customer financing can help offset sticker shock and bring big purchases within reach.
  • You want to differentiate based on customer service. Not all clients will have the cash to pay for those big jobs upfront. By offering financing, you’re putting their dream jobs within reach. Customers will appreciate the convenient and flexible payment options, especially if your competitors can’t offer the same.
  • You have services you want to up-sell on. Upselling can help you generate more business from existing customers and jobs. With customer financing, higher-ticket items are easier to sell.

If your business doesn’t fit these criteria, you can still offer financing to your customers. Especially if your customers have asked for it, or if you think it can help you win more sales.

Service provider offers financing to customers

What are my customer financing options?

There are two options for offering consumer financing:

1. You fund the payment plan yourself. This means you run credit checks, offer the financing, and manage payment collection on your own.

This is the riskier option. It comes with legal responsibilities, since your handling customer credit info. And it’s far more time consuming, especially if the customer stops paying.

2. You use a customer financing partner. This is the better option, especially for small businesses. The partner is responsible for credit checks, making credit offers, collecting payments, and managing legal risk.

When using a financing partner, the client pays the partner, and the partner pays you in full, as soon as the job is complete. You don’t have to waste time chasing clients down or suffer because of poor cash flow.

When choosing a financing partner, look for ones that are friendly towards homeowners. For example, some partners offer no late fees, no early repayment fees, or 0% financing over 3 months.

How do I offer financing to my customers?

Here’s how to offer financing through a partner:


Step 1: Tell your customers you offer financing

First, let your customers know financing is an option. You can include this information on your website, or directly on your estimates and quotes. If your partner offers integrated financing, the customer can apply directly from the quote.

Studies have show that when customers know they can pay installments, average sale prices increase by 20%.

Step 2: Customer applies for financing with partner

The customer applies for financing through your partner. In most cases, they’ll conduct a credit check to see if your client qualifies. Some partners will let the homeowner see their options first, using just a soft credit pull, which doesn’t affect their credit score. They’ll do a ‘hard pull’ when the customer decides to apply.

The partner will let your customer know if they were approved or denied.

Step 3: Service work begins

If your customer is approved for finance and has agreed to the conditions and payment terms, it’s your time to shine. You provide the service the customer ordered, whether it’s a new HVAC install or a retaining wall.

Step 4: The customer pays over time, while you get paid in full

Once the service is done, you get paid in full by the partner, and the customer starts paying their installments.

Your client will continue to pay the installments to the partner until their debt is paid off.

Win More Jobs with Customer Financing

Businesses that include financing options increase their sales by 20%. See for yourself.

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What does customer financing cost?

For all the benefits of customer financing, there are some fees to pay:

Business owners can expect to pay a 3-6% fee on every transaction. This is to keep the cost down for the homeowner. Some financing partners may also charge you a monthly fee of up to $50 based on the number of transactions. Make sure to ask your partner for full payment terms before agreeing.

Your customers pay an interest fee on the financed amount. Some finance partners can offer your clients 0% financing over 3 months.

To determine if offering customer financing makes sense, do a cost-benefit analysis.

This will help you understand the fees and whether your business can recoup your costs through the extra business generated. Here’s how:

  1. Calculate your current average invoice price. Use this as a benchmark to see if you can increase it by offering customer financing.
  2. Add optional add-ons, or ‘good-better-best’ packages to your price estimates to see if customers are interested or if high prices are a barrier.
  3. Ask your current customers if they’d be interested in customer financing for larger jobs. You can send a survey via an email survey, or simply ask customers when you quote jobs and track their answers in a CRM.
  4. If you do offer upsells or premium packages, calculate how much bigger your average invoice price could be. Remember: on average, customers who can take advantage of monthly payments typically pay up to 20% more for upgraded services.

After doing this cost-benefit analysis, you should have a good idea of whether offering consumer financing is a good idea for your business. If you can consistently win bigger jobs and increase sales by 20%, the fees may well be worth it.

The bottom line on customer financing

Offering customer financing can make you look more professional, improve customer loyalty, and increase sales.

Best of all, your customers can get the services they need, when they need them, bringing bigger and more ambitious jobs into reach.

Take the time to find out if consumer financing is right for your business. Talk to your customers, evaluate your costs, and find the right financing partner.

This article originally appeared in December 2020. It was last updated in February 2021.