What is Retail Finance & How Does it Work for Businesses?

Retail financing has huge benefits for shops - and their customers - in today’s changing retail landscape. As consumer confidence dips, and the buy-now-pay-later mentality continues to take hold, online retailers need to think of new ways to make their products more accessible.

If you want to boost sales without compromising on pricing, retail finance could be the right solution for your business. Financing is easy to set up, and the service is affordable for retailers of every size. Not only can offering finance options to customers encourage more buying activity, but it can keep your cash flow healthy too.

But what is retail financing exactly? And how does it all work? Here we give you the lowdown on everything there is to know.

What is Retail Finance?

So what is retail finance by definition? In the simplest terms, retail finance is a loan service. It’s a way of offering credit facilities or payment instalments to creditworthy customers. Essentially, it allows someone to spread the cost of a product or service, making it easier to afford. This can come in the form of a traditional store card (which works just like a credit card), or financing over an agreed term (usually set up at the time of purchase).

Having a credit account means that customers can buy what they need without waiting, or having to save over several months. And it also helps them manage their money better, particularly with big purchases (like expensive gadgets, furniture or household appliances), things that would be too costly to buy on a single month’s wage.

By offering a financing solution in-store or online, you can increase conversion and also drive sales on those higher value items.

But there isn’t just a one-size-fits-all solution, because all customers are different. As a business, you can offer financing in a number of ways. Here are some of the financing products that may be of interest:

  • 0% finance
    This is a way for customers to spread the cost over a longer term, with no interest to pay at the end. Deals with 0% interest are often very appealing as it doesn’t cost the customer any extra.
  • Finance with interest
    This is a loan over a fixed term, with accrued interest each month. A common form of financing that many shoppers are familiar with today.
  • Buy now, pay later
    Customers can take home their purchase and pay for it at a later date, making it affordable and convenient.
  • Bullet loans
    This is where the entire loan amount (and any interested incurred) is paid off at the end of the loan term. A good financing option for customers who don’t have the money for their purchase right away but will later.

How Does Retail Finance Work for Businesses?

For customers, retail finance provides both affordability and flexibility. But what is retail financing all about from a business point of view? And how does it affect your net sales if your customers select this option at checkout?

The good news is that deploying a retail finance solution causes no interruption to your business, and it doesn’t impact your cash flow. Loans are agreed between the customer and the loan provider, so retailers are spared from the nitty gritty of money collection. The loan is used to cover the cost of the sale, so turnover remains the same. The customer is required to pay the loan back, and this will be managed between themselves and the loan company.

Financing is a simple solution, with no risk for the business, and retailers reap as many benefits as the customer. Here are just a few of the advantages:

  • Increase in sales
  • Improved conversion
  • Better customer retention
  • More customer loyalty
  • Reduced cart abandonment
  • No disruption to cash flow

Another major advantage of retail financing for businesses is ease of setup. It can be obtained with a simple application, and approval can be provided within 24 hours.

Here at Duologi, we provide in-house or in-store training to ensure that your staff are able to offer financing to customers in the correct way. For online businesses, our financing solution comes with seamless integration too.

How Does Retail Financing Work for Ecommerce?

If you’re looking for retail financing for your ecommerce site, our financing technology can be integrated with your software quickly and conveniently. We offer plugins that are straightforward to install on all major ecommerce platforms, including Magento, Shopify, WordPress, and many more.

Once your application has been accepted, you should be able to have retail finance services up and running in a matter of hours. For your customers, it’s even easier as the finance options will automatically appear when they get to the checkout stage, and they will be able to complete their purchase in less than three minutes.

There are no setup or monthly fees with Duologi (some of our competitors charge a fee), so adding retail finance to your ecomm platform is an affordable way to improve your online customer journey.

Our team can also assist you with acquiring an FCA license, and there are non-regulated 0% interest finance products that can be used without a license in place.

If you’re ready to get started, or would like some more information, one of our team will be happy to answer any questions. Give us a call on 0333 1303 968 or drop us a note on our Contact Us page.