The Easiest Way to Start Offering Finance to Customers

Unlocking Sales: The Power of Customer Finance

For UK retailers, offering finance at the point of sale can transform customer buying power. It’s not just about increasing basket size—it’s about making purchases more accessible and fostering loyalty. Here’s how to get started with minimal fuss.

Who Benefits from Offering Customer Finance?

This guide is for UK business owners, managers, or teams considering adding finance options for their customers. Whether you run a brick-and-mortar shop, an e-commerce store, or a hybrid business, understanding retail finance can help you attract more buyers and boost conversion rates.

Retail Finance: Key Concepts and Terms

Before diving in, let’s clarify some essential terms:

• Retail Finance Broker: An intermediary (like Kandoo) that connects retailers with finance providers.

• Point-of-Sale Finance: Credit options offered directly to customers at the time of purchase.

• APR (Annual Percentage Rate): The annual cost of borrowing, including fees and interest.

• Interest-Free Credit: A finance plan where the customer pays no interest during a set period.

• Soft Search: A credit check that doesn’t impact the customer’s credit score.

Understanding these terms ensures you can communicate transparently with customers and choose the right provider for your business.

Your Options: How Retailers Can Offer Finance

There are several ways UK retailers can introduce finance for their customers:

1. Partner with a Retail Finance Broker: Companies like Kandoo handle the regulatory, technical, and administrative aspects, making it straightforward for you to offer a range of finance products.

2. Direct Partnership with Lenders: Some retailers strike deals directly with banks or specialist lenders. This requires more legwork and ongoing compliance.

3. Buy Now, Pay Later (BNPL) Platforms: Widely used online, BNPL lets customers split payments but can sometimes carry higher merchant fees or customer risk.

4. In-house Credit: Rare among smaller retailers due to risk, but some offer their own instalment plans.

For most UK SMEs, a broker partnership is the simplest and least risky route. Brokers connect you to multiple lenders, manage compliance, and provide tech integrations for e-commerce or in-store systems.

Cost, Impact, and Risks

• Merchant Fees: Expect to pay a percentage of the transaction or a fixed fee. This is usually offset by higher sales volumes and larger average order values.

• Customer Acceptance Rates: Not all customers are approved for finance—approval depends on credit checks.

• Cash Flow Benefits: Retailers are typically paid upfront by the lender, reducing cash flow risk.

• Regulatory Responsibility: Brokers often handle the heavy lifting, but you must ensure marketing and sales practices comply with UK consumer credit regulations.

Risks are mitigated by choosing reputable partners and clear, compliant communication with your customers.

Who Can Offer Finance? Eligibility and Requirements

• UK-registered business: Limited companies, partnerships, and sole traders can apply.

• Trading History: Ideally, you should have 12+ months’ trading history.

• Financial Standing: Some brokers or lenders require a minimum turnover threshold.

• Compliance: Retailers must agree to follow FCA guidelines (even if not directly regulated).

Brokers like Kandoo streamline onboarding, making the process accessible for most established UK retailers.

Step-by-Step: How to Start Offering Customer Finance

1. Research reputable retail finance brokers.

2. Compare products, rates, and integration options.

3. Submit an application or enquiry to your chosen broker.

4. Provide business documents and agree to compliance checks.

5. Integrate finance options into your online/physical checkout.

6. Train staff on offering finance and handling customer queries.

7. Launch your finance offer and promote it to customers.

8. Monitor uptake and liaise with your broker for support.

Pros and Cons: What to Consider

Pros:

• Increases basket size and conversion rates

• Attracts new customer segments

• Improves cash flow (you’re paid upfront)

• Reduces customer price sensitivity

Cons:

• Merchant fees apply

• Not all customers will be eligible

• Regulatory obligations require attention

• Requires integration and staff training

Consider your sales volumes, customer base, and capacity for compliance before proceeding.

Before You Decide: Key Points to Watch

• Transparency: Present finance options clearly to avoid misunderstandings and complaints.

• Regulation: Even when using a broker, ensure your marketing follows FCA guidelines.

• Customer Experience: Choose solutions that integrate smoothly into your sales process, online and in-store.

• Training: Equip your team to answer finance-related questions confidently and accurately.

Taking a measured approach protects your business reputation and ensures long-term success.

Alternatives to Offering Finance

If full retail finance isn’t right for you, consider:

• Layaway Schemes: Customers reserve items with staggered payments, collecting goods after final payment.

• Discounted Upfront Payment: Offer a small discount for immediate payment to encourage larger purchases.

• Third-Party BNPL Apps: Integrate services like Klarna or PayPal Credit, though fees and customer experience may differ.

• Gift Vouchers: Encourage spending with branded gift cards for future purchases.

Each alternative has its own cost, convenience, and customer appeal factors.

FAQs

Q: Do I need FCA authorisation to offer finance?
A: Not if you use a fully regulated broker like Kandoo, but you must adhere to their guidelines.

Q: How quickly can I get set up?
A: Many brokers can onboard retailers in a few days, depending on your business size and complexity.

Q: What happens if a customer misses payments?
A: The finance provider, not the retailer, manages repayment and collections.

Q: Can I offer finance online and in-store?
A: Yes, most solutions support both channels.

Q: Will offering finance affect my cash flow?
A: No, you’re typically paid immediately by the lender, regardless of the customer’s repayment schedule.

Q: Is customer data secure?
A: Reputable brokers and lenders use robust security measures and comply with UK data protection laws.

Ready to Offer Finance? Here’s What to Do Next

Start by researching leading retail finance brokers with a strong UK presence. Compare solutions for your sector, check reviews, and reach out for a consultation. Preparing your business documents and training your team now will make onboarding smoother. The right finance partner can help you unlock new growth quickly and confidently.

Disclaimer

This article is for informational purposes only and does not constitute financial or legal advice. Always consult with a qualified professional or your finance broker to ensure compliance with current regulations and suitability for your business.