Offer finance for a home improvement business

Introduction

The home improvement industry has experienced a significant boom in recent years, driven by homeowners seeking to increase the value of their properties or simply make their living spaces more comfortable and functional. As a business owner in this sector, offering finance options to your customers can be a game-changer. Not only does it make your services more accessible, but it also allows customers to embark on larger projects that they may not have been able to afford upfront.

In this article, we will explore the benefits of offering finance to customers in the home improvement industry and how partnering with a retail finance broker like Kandoo can make the process seamless for both you and your customers.

Why Offer Finance for Home Improvement Services?

In today’s competitive market, providing finance options to customers can significantly improve your business's success. Here are some key reasons why offering finance is beneficial:

1. Increased Sales and Larger Projects

One of the most obvious benefits of offering finance is that it allows your customers to spread the cost of their home improvement project over time. This can lead to an increase in sales as customers who may have hesitated due to upfront costs are more likely to proceed with their projects.

Moreover, customers are often willing to undertake larger projects when finance is available, knowing they won’t have to pay the entire sum immediately. For example, a customer who initially planned to remodel just the kitchen might decide to extend the project to include other rooms in the house, thanks to the manageable monthly payments.

2. Improved Customer Loyalty

Offering finance can enhance your relationship with your customers. By providing them with flexible payment options, you show that you understand their financial constraints and are willing to help them achieve their goals. This can build trust and encourage repeat business. Satisfied customers are also more likely to refer your services to friends and family, further boosting your reputation and customer base.

3. Competitive Advantage

Many home improvement businesses still don’t offer finance options, which means you can set yourself apart from competitors by doing so. Customers are more likely to choose a business that offers flexibility and convenience in payment, especially when dealing with high-ticket items such as kitchen renovations, loft conversions, or energy-efficient installations like solar panels.

4. Improved Cash Flow

When you partner with a finance provider, you typically receive the full payment for the project upfront from the lender, even though the customer will be paying in instalments. This means your cash flow remains healthy, allowing you to invest in materials, labour, and other operational costs without delay. In turn, this can help you scale your business and take on more projects.

Types of Finance Options for Home Improvement Customers

Before diving into how you can offer finance to your customers, it’s essential to understand the types of finance products that are commonly used in the home improvement industry.

1. Interest-Free Credit

Interest-free credit is a popular option for customers who want to spread the cost of their project over a set period, typically 6 to 24 months, without incurring additional interest charges. This option can be very appealing to customers as they know they will only be paying the original project cost.

However, as a business owner, you will need to cover the interest costs, which may affect your profit margins. Despite this, many businesses find that the increased volume of sales offsets the cost of offering interest-free credit.

2. Low-Interest Finance

Low-interest finance allows customers to spread the cost of their project over a longer period, usually between 2 to 10 years, with a small interest rate applied. While the customer will pay more overall due to the interest, this option makes larger projects more affordable by reducing the monthly payments.

3. Buy Now, Pay Later (BNPL)

Buy Now, Pay Later schemes allow customers to delay their payments for a set period, typically 6 to 12 months. After this period, the customer can either pay the full amount or begin making monthly payments with interest. This option can be particularly attractive for customers who are waiting for a bonus or other financial windfall but want to start their project immediately.

4. Secured Loans

Secured loans are typically used for larger home improvement projects. These loans are secured against the customer’s property, which means the lender can repossess the home if the customer defaults on payments. Secured loans usually come with lower interest rates and longer repayment terms, making them a viable option for substantial projects like extensions or structural work.

How to Offer Finance in Your Home Improvement Business

Now that we’ve covered the benefits and types of finance, let’s look at how you can start offering finance to your customers.

1. Partner with a Retail Finance Broker

The easiest way to offer finance to your customers is by partnering with a retail finance broker like Kandoo. As a UK-based broker, Kandoo specialises in connecting businesses with finance providers, simplifying the process for both you and your customers.

Kandoo works with a wide range of lenders, offering various finance options that can be tailored to suit the needs of your customers. This means you don’t have to worry about setting up and managing complex finance agreements – Kandoo handles the paperwork and administration, leaving you free to focus on your core business.

2. Get FCA Authorisation

To offer finance directly to your customers, you’ll need to be authorised by the Financial Conduct Authority (FCA). This ensures that you comply with the regulations surrounding consumer credit and that you are providing finance responsibly. However, by partnering with Kandoo, you can bypass the need for direct FCA authorisation, as they act as the intermediary between you and the finance providers.

3. Promote Finance Options

Once you’ve partnered with a finance broker and have the necessary authorisation, it’s time to start promoting your finance options. Make sure your customers are aware that finance is available by including information on your website, in your marketing materials, and during customer consultations.

Be transparent about the terms and conditions of the finance options you offer, including interest rates, repayment periods, and any fees that may apply. This will help to build trust with your customers and ensure they fully understand their financial commitment.

4. Train Your Sales Team

Your sales team plays a crucial role in promoting finance options to customers. Ensure they are well-trained on the different finance products available and can explain the benefits clearly and confidently. They should be able to answer any questions customers may have and guide them through the application process.

5. Offer Finance at the Right Time

Timing is everything when it comes to offering finance. Introduce the option early in the sales process, but make sure to highlight it when discussing the project cost. This allows customers to consider finance as a viable option and helps to overcome any potential objections related to affordability.

The Benefits of Partnering with Kandoo

As mentioned earlier, partnering with a retail finance broker like Kandoo can simplify the process of offering finance to your customers. Here are some key benefits of working with Kandoo:

1. Access to Multiple Lenders

Kandoo works with a variety of lenders, which means your customers will have access to a wide range of finance products. Whether they’re looking for interest-free credit, low-interest finance, or a secured loan, Kandoo can match them with the right lender for their needs.

2. Simple Application Process

Kandoo’s online application process is quick and straightforward. Customers can apply for finance from the comfort of their home, and Kandoo will handle the rest. This reduces the administrative burden on your business and ensures a smooth experience for your customers.

3. No Need for FCA Authorisation

By partnering with Kandoo, you can offer finance without needing direct FCA authorisation. Kandoo is fully authorised and regulated by the FCA, meaning they can handle the regulatory requirements on your behalf.

4. Improved Customer Satisfaction

Offering finance through Kandoo can improve customer satisfaction by making your services more affordable and accessible. Customers appreciate having flexible payment options, and the convenience of Kandoo’s online platform ensures a hassle-free experience.

Conclusion

In today’s competitive home improvement market, offering finance can provide your business with a significant advantage. Not only does it make your services more accessible to a wider range of customers, but it also enables larger projects and boosts your cash flow. By partnering with a trusted retail finance broker like Kandoo, you can offer a variety of finance options without the hassle of managing complex agreements or obtaining FCA authorisation.

With the right finance solutions in place, your home improvement business can thrive, attracting more customers and generating higher revenue. So, why not take the next step and explore how Kandoo can help you offer finance to your customers today?