5 Reasons Your Business Should Offer Point-of-Sale Financing in 2019

Point-of-sale financing is quickly increasing in popularity for its ability to increase sales numbers and order values. Read more about the service's benefits.

Although technology is rapidly advancing and it seems that everyone is buying online, 94% of retail sales are still made offline in physical stores.

Generating revenue from Point of Sale clearly isn't going anywhere, and it really shouldn't. There are reasons why both businesses and customers can benefit from POS financing.

Continue reading to learn five reasons your business should consider implementing point of sale financing.

What is Point of Sale Financing?

Point of Sale is the time and place a purchase is made in person. An example of Point of Sale is when you go to the grocery store and buy food. POS also occurs when you pay for clothes at a shopping mall.

A POS program is the cash register completing the payment transaction. The system includes a barcode scanner, receipt printer, money drawer, and usually a debit or credit card reader.

The opposite of Point of Sale would be if you decided to buy food and clothes online. You aren't physically in front of the register and employee in this case.
POS financing is the way you can pay for what your buying. The POS system gives you more than one option. You can pay with cash, a credit or debit card, or a loan.

Why Should You Offer POS Financing?

Here are five reasons why your business should offer POS financing. Not only will it help your business, but it will help customers as well.
 
1. Increase in Sales

A study by Forrester Research found that companies with an online POS financing option had a 32% sales increase.

It's easy to see why POS financing has this power. You're more likely to sell something to a customer if you give them more than one way to pay for it.

They may not have cash on them, but maybe they can use their credit card. For bigger items such as furniture and appliances, many businesses give customers the option of taking out a loan. The money is lent right from the business rather than a third party, and it's lent immediately at the time of purchase.

There can also be different payment plans. These differ in how much the customer will pay each week or month and how long it will take to pay off the loan. Each plan will have a set interest rate or no interest at all.

2. More Financing Options

This is where customers also benefit from POS financing. They aren't stuck paying with cash. They can use their credit or debit card. A loan option may be offered to them.

Most people have to use their credit card when purchasing a big-ticket item. There are some who opt to use their credit card instead of cash for almost anything.

It's nice to be able to buy items right away, but the interest builds up. Interest rates have been cut by the Federal Reserve and this cut won't dramatically change the interest rates for credit card debt. Currently, the average interest rate is almost 18 percent.

Aside from this downside, many people choose not to have a credit card or don't have a good credit score, and many aren't approved for personal loans. You can apply for a credit card no credit check to get around this. You can't escape interest.

Payment plans help those who don't have a credit card, can't get a loan, and don't want to deal with high-interest rates from credit card debt. Direct loans through the business is a third payment option that online stores don't have.

Customers are given more time to fully purchase something. Interest rates are fixed and some plans don't charge interest.

Even better, some businesses are flexible with payments plans and offer more than one or will make an exception for a customer. For example, a couch may have a 6-month, 1-year, and 2-year plan. The buyer can choose the plan they'll be able to afford.

3. Increase AOV

AOV, or average order value, is the average amount customers have spent on your products or services. You can calculate this number by dividing the total revenue by how many orders or purchases you've had in a period of time.

A business can have high AOV and narrow margins. This means the order value exceeds the total number of customers. Companies that sell high quality and more expensive products may have narrower margins than average.

POS financing has the ability to raise the AOV while keeping the margins wide, too. With the options of direct loans and credit cards, more people are able to purchase more products from businesses who offer POS financing.

A higher AOV will also improve a business's ROI or return on investment. ROI is the ratio of net profit to net worth. A good ROI means you're getting all of your investments into the business back and then some.

4. Quick Credit Checks

People have to wait up to 24 hours to find out if they've been approved for a loan. Because lenders don't want to lose a buyer, POS systems are designed to check a credit application almost instantly. The application is quickly checked for various credit issues.

POS systems also use this process when businesses offer their own credit cards. Businesses that have their own credit cards eliminate the need to set up a payment plan every time a customer makes a purchase. With a credit card for that specific business, buyers will have a fixed interest rate and be regularly billed monthly.

5. Boost Customer Loyalty

An often overlooked benefit of POS financing is the experience of the customers. Point of Sale allows people to take home items they otherwise wouldn't have been able to. The quick process and transaction POS creates happy and loyal customers.

There's no waiting for loan approval. It takes a few seconds to be approved and then the product is theirs.

POS financing increases customer loyalty because buyers aren't rejected when they want to make a purchase. They have options, and the processes of these options are simple.

Consider POS Financing

Point of Sale financing is a win-win for you and your customers. They have more chances to buy from you and, in turn, your sales increase. You'll probably see a higher AOV and ROI, too.

The experience is positive for the customer. It's not confusing or lengthy — just a few steps and they can bring the product home. This type of positivity will surely have your customers coming back for more.

Consider choosing a POS financing program for your business to boost your sales rate, overall profits, and increase customer loyalty. Check out our blog for more business tips.
 

 

 
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