Far too many customers are turned away and declined from services over shortcomings with credit. When you rely on traditional lenders, they only allow you to payment plans for customers with good credit scores, which leaves you unable to provide services to customers who can’t afford your services.
It happens almost daily: After spending 45 minutes on company time signing a customer in and running their information, you learn that they cannot qualify for a payment plan. No business can afford to waste time and money fussing with customers who don’t get approved. But you can save time and reach missed opportunities by exploring new customer payment plans options, to take on as many customers as possible.
The time for a change is now: Releasing their results in mid-June, researchers at McKinsey & Company found that 25-36% of small businesses in the US could close permanently as a result of customers lost due to the disruption by COVID-19 — unless they intervene by rethinking their current payment plans processes. Without any changes, businesses will inevitably remain in the same place.
Missed opportunities and a shrinking customer base are linked to flaws with common existing payment plan systems.
Flaws with Common Payment Plan Systems
Don’t miss out on opportunities with customers due to credit scores, late payments, defaults, and other customer setbacks, because there are ways your business can accommodate customers by exploring new options with payment plan options — allowing you to provide service to any customer.
A whopping 53% of customers have turned away because of credit scores, according to an analysis from a team of investigators at One Technologies. Plus, nearly a quarter of Millenials aren’t even aware of their own credit scores — meaning any potential customer who is 39 or younger in 2020. Moreover, according to the Consumer Payment Plans Protection Bureau, around 26 million Americans are “credit invisible” because they have no credit history with a nationwide consumer reporting agency.
These barriers mean that over half of the customers who are denied payment plans end up becoming missed opportunities for your business. Credit scoring drastically limits the pool of potential customers.
You don’t have to accept the limitations that are commonly presented when processing payments through traditional lenders and in-house payment plans.
What Traditional Lenders Fail to Provide
Businesses lose potential customers who are denied payment plans by traditional lenders, because of insufficient credit and other barriers. The last thing a business needs is a limited customer base during a pandemic.
Traditional lenders tend to have relatively high application requirements, leading to more missed opportunities. Reaching the missing fraction of customers and expanding your customer base could translate to a recurring revenue stream for your business when you provide them the ability to go on a payment plan.
The concept of the credit score suppresses the most vulnerable population, leaving businesses unable to provide services for customers when they rely on traditional lenders’ vetting systems.
Common Problems with In-House Payment Plans Systems
In-house payment plans also present their own set of problems for payment plan systems. Most businesses don’t have the resources to efficiently payment plan their customers. Imagine trying to explain to a customer that six months’ worth of payments hasn’t gone through — because you simply didn’t have the time to monitor your contracts and outstanding payments.
Businesses often need to hire more employees in order to collect monthly payments at a reasonable rate. Since most businesses don’t specialize in collecting debt, this results in a higher default rate and lost revenue. Some businesses simply don’t offer enough payment plan options or their plans carry interest rates that disadvantaged customers are unable to bear.
In-house payment plans rarely incorporate automatic payment systems that streamline the process and save time.
Take it Into Your Own Hands by Providing More Payment Options
Converting missed opportunities with new payment options will not add risk — it will just add revenue and protect your business. You don’t have to continue turning away customers just because of credit scores. One of the ways Denefits can help your business seize new opportunities with potential customers is with custom payment plans. With this option, you can enjoy a 0% service fee, you get the exact amount you payment plans the customer for, and you keep 100% of your down payment.
You have total control over how to split the processing fees.
Store your customer information securely with trained professionals. Avoid hiring more employees just to collect monthly payments. In addition, find a service that specializes in collecting debt, to decrease your default rate and increase revenue.
With Denefits, there is no Credit Check for customers — AND we guarantee your payments.