What is customer financing?

What is customer financing?


min read

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Customer financing, also known as consumer financing, allows your customers to make a purchase now and pay for it later. Customer financing can be good for both you and your customers - they get the product they want, and you are able to sell more full-priced products and services. 

What is customer financing?

Having a customer financing service allows your customers to pay for goods, services, or products over time. The typical customer financing service requires a credit check as part of the application process. Doing so enables you to make sure your customers are reliable enough to offer finance to.

There are two ways to offer customer financing solutions - you can do it yourself, or you can use a third-party financing company. 

How to offer customer financing

Is it worth offering customer financing?

Customer financing can be complex, and it’s important to understand whether it’s a good fit for your business and customers. There are a few things you should consider before making the decision to offer financing as a service:

Do customers qualify?

Some traditional lenders only work with people who have a (positive) history of borrowing.

Is there a minimum amount they have to spend?

Some platforms have high minimum order values - in some cases, £1000. This of course will depend on the lender.

Will the financing actually be used by your customers?

It doesn't make sense to offer customer financing if your customers aren’t interested.

How much does it cost your customers?

Having a customer financing option with competitive rates can keep your customers coming back.

Deciding What Kind of Financing to Offer

If self-financing, you'll have to run credit checks and collect payments yourself. You'll also have more legal responsibilities. There are 5 important criteria to bear in mind with any financing service.

  • Implementation - The best tools for financing are easy to set up, and are simple for your customers (and staff) to understand
  • Scalability - Customer financing should help you increase sales across both your physical store and online store
  • Cost - Third-party financing companies charge merchants a percentage of each transaction they finance, which can hurt a business's bottom line. When a store offers in-house financing, their cash flow drops at first because they don't get paid for financed purchases right away.
  • Risk - Letting customers buy now and pay later always comes with some risk, but the risk is higher for businesses that offer in-house financing
  • Flexibility - Some platforms for customer financing limit what can be financed

Choosing a Financing Provider

If you've decided that customer financing is a good fit for your business and what kind of financing you’d like to offer, it’s time to choose a provider (if not offering financing yourself). Some popular providers include:


  • PayPal Credit lets customers pay for things with no interest for six months
  • PayPal Pay in Four lets customers make payments over four months without interest
  • Compatible with BigCommerce, WooCommerce, and Magento


  • Has more than 250,000 partners
  • Can pay in four instalments with no interest
  • Can pay in 30 days
  • Can pay over 6 to 36 months


  • Stores can get loans with no interest
  • 90% of people who shop are approved for financing
  • First of four payments made at checkout - the rest over the next six weeks


  • No recourse to your if your customer can't pay
  • Trade customers get a variety of payment options to suit them
  • You get funds in your account instantly no matter what option they choose to pay
  • You can control fee set up to offer interest free terms to your customers or accept all your payments for free and avoid card fees
  • Integrates with your existing systems software via plugins and custom API
  • Accept payments across all channels: ecommerce, invoices, in person.

Integrate and Advertise Financing Across Sales Channels

Wherever you sell your products or services, you’ll need to add the option of financing. Whether offering your own financing or going with a third-party provider, you’ll have to integrate it with your POS and eCommerce platforms.

  • In-store POS - Allow customers to finance in-store purchases
  • Online checkout - Put options for financing on your checkout pages
  • Product pages - show both the list price and the rate for financing so customers can see if a particular product is affordable

After integrating all of your financing options, you have to tell your customers. You can do this by adding signs in-store, on your website (i.e. banners), or on social media. This can encourage people who are just looking to make a purchase. Financing can also make shoppers more likely to choose your brand over your competitors.

The benefits of customer financing 

If you choose to offer finance to customers, there are plenty of upsides for both you and them:

Increase order size: When a business offers customer financing, the average order size goes up by 15%. Bigger orders = more revenue

Less hassle: Third-party financing means you don't have to worry about keeping track of accounts or getting paid

More sales: The initial cost of a product can be an issue for some customers. Buying in instalments can make purchases manageable


Words by
Miles Warner
Article updated on:
February 15, 2024

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