Retail finance for my customers

[ncaquatech]

Hello ladies and gentlemen,

My name is James, my company is NC Aquatech. We do installation of aquariums and are also a licensed retailer of all related equipment and marine livestock.

I am looking to increase my sales by offering some sort of contract payment or finance options for my customers. We are not a large enough operation to provide these options alone, so I am looking to involve some sort of third party finance company or bank.

Here is a short list of companies that I have found offer services like these, I have done a small amount of research and these companies seem to be the better of the bunch. By that I mean BBB Rating of A.

-East bridge funding
-Wells Fargo
-Genesis
-HSBC
-MRC Military
-First Franklin
-Citi Bank
-GE
-EBA Raleigh
-Strategic merchant solutions
-Auctus Rebus
-US merchant systems

I am concerned that the larger banks will only accept contracts from high score customers, 700? I'm sure that some of these smaller companies that will loan to customers with a 600 or below score will have inflated APRs. Some providers I didn't list wanted a 159% APR on a $1500 loan, I would not insult my customers with that offer.. Others want larger installation fees for equipment, we are not looking for this option either.

US Merchant Systems has decent reviews, but has numerous resolved complaints on the BBB. Auctus Rebus has a good score, no complaints, and an A+ rating but I cannot find a lot of information online about the company itself. They also seem to be the best fit on options for us (39$ per month, No equipment needed, We are paid in full within 48hrs).

Tomorrow I will call and get more in depth information on these companies policies. Really my inquiry is, does anyone have any experience or knowledge on consumer finance that they could share with us pertaining to this matter, or on the finance companies in question?

Thank you ahead of time for your responses, James.

[paul woodall]

Hello NCaquatech,

If your goal is to increase sales, not sure "payments" is what you want to do. Now you have collections to worry about. Late payments. Defaults. It may lower your sales.

There are lots of ways to increase sales:
- promo prices
- free high value item that costs you little
- marketing
- website/ online sales

Not sure what you have tried and how much your aquariums cost.

Cheers,

[ncaquatech]

Thanks for the reply Paul, I called everyone on this list today and spoke with them about their terms and such. Forgive me for the confusion, payments would not be made to me, nor any collection in case of default. The type of option I am looking for is a third party financing sort deal, I get paid in full for my products within 24-72hrs, my customers would be making payments to the financial company. I'm out of the picture when they have signed a contract and received our goods, and once we get paid.

GE, HSPC, and Wells Fargo do not do "consumer finance" for my industry. They are more oriented towards jewelry and such.

The smaller companies will do this, but like I had stated some want monthly fees, and sell overpriced equipment to you. As well as locking you in on a 48 month monthly payments schedule (39-129$/month) for their services.

MR military and Merchant Systems do it on a deduction bases. Meaning that they take a percentage of the total paid to me. 13.9 and 15% respectively. No monthly, fee no equipment. I have yet to have time to read much fine print.

As an example cost the typical 125 gallon aquarium turn key system would run around $3000, including our profit margin of around 30%. I have quotes where my customers have asked me about finance options, so some option would be nice if the circumstances are right. 15% would be a sizeable part of our profit margin though..

Your thoughts are appreciated. What is your opinion on services like that?

[ncaquatech]

Here is an email from a military lender. (We have a lot of military in Jacksonville).

"Per our conversation, I am including some information about our program and process.  Military Credit Services has specialized in retail financing for Active Duty, Career Retired, and Federal Employees for over 30 years. Our headquarters is located in Norfolk, VA and continues to be a family owned business.


We offer a 100% electronic and user friendly process that allows you to easily submit applications through our website (www.militarycredit.com).  You would be given a unique username/password to access this feature.  Our process has the following steps:

1.       Submit an application

2.       Provide an LES (military paystub)

3.       Finalize your sale and sign electronic loan documents

4.       Provide a copy of your sales receipt

We fund by direct deposit within 24-48 hours of the completed contract.  We offer credit lines of $2,000-7,500 on terms of 18-24 months, offering flexible payment options.  Unlike traditional lenders, we are able to assist customers customer of all credit types, approving about 80% of applicants.  We offer every customer a 90 day same as chase options and a flat 18% APR or 1.5% monthly interest rate. 

We pride ourselves for outstanding customer service so you will find we are always available for you and your customer needs.  We do not charge sign up fees, monthly fees, application fees, nor do we require a certain volume of business per month.  We will discount your total invoice by 15%.  I hope this overview has highlighted some of the ways we can assist your company, but should you wish to discuss this opportunity in further detail, please feel free to contact me at your earliest convenience."

[paul woodall]

At 15% "fees", you now make 50% less money per $3,000 tank (If I read your numbers correctly). Profits should be focus. $500 is better than $0 but depends on how much work is involved and the business risks.

It would be great to sell $3,000 tanks all day but that sounds like a particular customer. I presume you take mastercard/ visa. Another option you may want to consider is calling your merchant account to see if they allow "payment plans" for your customers. You may need to do the payments though (i.e. 3 monthly installment of $1,000) vs a 3rd party which again has pros and cons. In theory a MC or VISA allows a consumer to do this anyways.

You should be asking yourself how many more tanks would you sell by offering this. If you are losing a few sales/month to your competition then maybe. If it's 1 every 3 to 6 months then maybe not.

Try and identify who your customer for that $3,000 tank is and then find more of them. Or alternatively throw in "Free installation" or "Free "aquarium stuff" that may only cost you $100 vs the $150 in "fees".

Cheers,

[Reidtel]

James were you able to get any answers or find a company to finance your customers' purchases? I am in the process of doing the same. My company is a small shop and I realize that we are losing sales to large companies that can offer leasing or financing options in their quotes. Let me know what you found out.

[smallbizfinancier]

If you can move some sales to the Internet or have people pay online for their purchase, you can probably lean on Max Levchin's new company: https://www.affirm.com/