With Lost Customer Opportunities, Revising Payment Plan Strategies Can Help Your Business Reach More Customers
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 plan 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 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
Businesses miss out on opportunities due to credit scores, late payments, defaults, and other customer setbacks, but 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 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.
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, but alternative options can help your business reach those customers who are typically denied based on credit scores.
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 flexible 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.
How Can You Expand Your Customer Base?
There are several ways to set up alternatives to current payment plan options to increase your customer base. With the added complications and setbacks due to the ongoing COVID-19 pandemic — now is the time to reevaluate payment plans strategies.
Save time, money, and effort by implementing new procedures to streamline the process of payment processing and attract new customers. Converting missed opportunities with new payment options will not add risk — it will just add revenue and protect your business. Here are some ways you can maximize your customer reach with more payment plan options for your customers to choose from:
- Don’t limit your customer base with traditional lenders, who routinely deny customers based on credit scores.
- Create custom payment plans to provide more flexibility to your customers, and in turn, save thousands in recurring revenue.
- Decrease the number of employees by providing ways to send documents electronically and implementing automatic payment services.
- Expand payment plans options for customers who are denied based on credit scores.
- Consider Denefits payment plan options, where there is a 0% service fee for businesses: they get the exact amount they payment the customer for.
Learn more about how to collect your overdue payments for FREE. For a limited time, all payment plans made with Denefits Accounts Receivable are Guaranteed.