After COVID, is finance the future for small traders?
Posted on 04/12/2020
We’ve seen a drastic rise in the popularity of consumer finance in recent decades. With recession looming, and coronavirus likely to be a feature of everyday life for the foreseeable future, does flexible payment offer tradespeople a way to keep the orders rolling in? Matt Franklin, founder and CEO of Payaca, gives his take.
Could COVID-19 cement finance as a central part of how millions of us shop?
To some, it might seem a strange thing to be talking about as we enter the greatest recession in living memory.
But in the months since lockdown was first relaxed, something strange has happened.
Many assumed that consumer demand would plunge given the ongoing pandemic, and the economic uncertainty that lies ahead.
But in glass and glazing, general building, landscape gardening and a whole range of other trades in and around the home improvement sector, business has boomed.
Some companies have had record months, and others have struggled to keep up with demand.
And including finance options could be the key to keeping sales coming in through the unpredictable months to come.
More customers, higher conversions, bigger sales
Even before coronavirus, the arguments for making it easy for customers to spread the cost were hard to ignore.
Demand for consumer finance has been growing rapidly for a while. New Day, which provides finance for high-street stores like Debenhams, House of Frasier and Topshop, have seen their lending grow by 32% in recent years.
A Divido study of more than 200 retailers found that over half felt that finance had broadened their customer base, two-thirds had seen the number of items bought in one go increase, and the majority had experienced sales growth between 11 and 30%.
17% reported increases of more than 50% since they started offering flexible payment.
And Dekopay reports that 65% of people who pay using finance say they wouldn’t have been able to afford the purchase without it, 59% would shop elsewhere if a retailer didn’t offer finance, and if no finance option was available, 72% would postpone buying altogether.
They also found that conversion rates were up to 60% higher.
We already know that people spend more money on average when they’re not paying with cash – with some studies suggesting we’re willing to fork out as much as 12-18% more.
All of which makes embracing finance an excellent idea for any business.
The way to beat recession?
But 2020 is anything but a normal year. For the home improvement sector, at least, the post-lockdown period is going very well – but none of us know what lies around the corner.
Regardless of what the next few months brings, however, at Payaca we think the coronavirus period will accelerate the shift towards consumer finance - and, if you want your business to thrive in uncertain times, make offering it more crucial than ever.
Homeowners clearly want to keep spending – but during recession, they’ll inevitably start to watch their pennies. With finance, they can do both. Even the biggest purchases can become manageable monthly payments. Consumers can pay for home improvements the same way they pay for Netflix.
Payaca: problem solved
But window installers, builders, gardeners and others aren’t Debenhams.
It’s obviously much harder for sole traders and small businesses to offer finance – isn’t it?
With Payaca, it doesn’t have to be.
Payaca provides quick and intuitive web and mobile apps that lets users secure more work at higher values by giving customers the option to secure finance.
After logging in on the web or downloading it on your phone or tablet, you can use it to send a quote with finance options included. Homeowners can then apply to borrow up to £35k in just two minutes, with instant decisions, and payouts as fast as the same day.
But that’s not all Payachttps://www.payaca.com/a provides. It also includes the ability to create interactive quotes with choice and optional extras, all making it easy for customers to choose your business and increase their spend. In addition you can instantly send professional invoices, accept card payments and automatically send data to your accounting software.
Interested in finding out more? Then visit www.payaca.com and start your free, no-obligation 7-day trial today!