Is Contractor Financing Right For You?
Contracting work isn’t cheap. You know this as a leading service provider when coming up with quotes for high-quality work. Clients will get what they pay for, and you have to offer a competitive but honest rate.
The problem is that high-end services can be too expensive upfront and put clients off. Payment plans and financing solutions for contractors could be the answer. Here are some of the pros and cons.
The Benefits Of Offering Contractor Financing Options
1) Closing sales
The main reason that contractors turn to financing options for their clients is to close more sales. If you have a high-end service where clients potentially spend a lot of money at once, it’s easy for them to back out. T
hey might get through the sales pitch, get to the price, and think better of it. Worse still, they might go elsewhere to get quotes from cheaper people. This might seem like the better option in the short term, but they won’t get the same high-quality work you can offer.
Learning how to offer financing as a contactor can keep customers on your website for longer and convert the sale more easily. Mention this option upfront on your landing page and early on in phone calls so you both know where you stand.
Do so in a friendly and encouraging manner to show that you’re on their side. They may still need time to think it over, and that’s fine, but they are also still more likely to come back and say yes.
2) Add ons
Another benefit of financing options for contracting services is the potential for additional sales. Add-ons and upgrades are a great way for contractors and tradespeople to get some more money out of a job.
You can highlight services to improve the longevity of projects, like extra coating and weatherproofing, or talk about the high-end materials you could use for a certain aesthetic.
These aren’t going to appeal to people who have paid thousands in one go. However, by slashing the initial price through monthly payments, the idea becomes more appealing. It will end up costing them more and giving you a better return at the end of the project, but not with the same financial headache as an upfront payment.
3) More sales
If you can handle this process well and provide great customer service at the same time, you could end up generating a lot more sales over time. Clients will appreciate the effort you went to to make their project affordable and to offer more convenience.
They will see you as a high-value option because there is no financial stress, even if the overall costs aren’t lower. This can have a significant knock-on effect on future sales. Those clients may be so happy with the service that they come straight to you with future projects. They’ll know they can budget for work that perhaps wasn’t such a certainty before.
They will also be more inclined to recommend you to friends and family who may also need a cost-effective solution for their own home. These recommendations make generating sales so much easier. If they can also write some testimonials for your website and Google reviews, that’s even better.
4) Better marketing
This financing option can also act as an effective marketing tool for your company. You can sell yourself as the more affordable option by promoting these payment plans upfront. Prospective clients will see that you have the potential to be a more cost-effective choice when money is tight. That increased interest will get them over to your website to learn more about the services.
They can then contact you from there if they’re convinced you’re the right choice. You can add this payment plan to your local ads and flyers in your community. However, you can also take advantage of online marketing and convert traffic more easily.
Facebook ads can target locals and showcase your company as an effective local business. Social media posts that highlight your renovation projects are perfect as inspirational content on Instagram. Just make sure you have working links to the right website pages.
The Downsides Of Offering Contractor Financing Options
There are downsides to consider when offering financing options as a contractor. For a start, there’s no guarantee that clients will pay the full price for your work on time. Upfront payments are better for companies in many ways.
You get the funding to purchase the materials and get hold of everything you need to complete the work. You also have the money secure to pay your team to carry it out. With financing, you’re reliant on borrowing and a more complicated system.
Most clients will sign up with good intentions and will pay off the costs over the agreed time. Yet, there will be some to don’t budget accordingly and struggle with the costs. You could end up chasing up payments and dealing with lenders when you should be handling new sales.
This is why it’s also important to work with the right lenders to get the most secure financing solutions. There are plenty of lenders that can offer plans with no extra costs and fees at your end. Still, it can be stressful to deal with them, set up the plans, and make sure everything is above board.
All financing options need to be fully legal and compliant with regulations, so you don’t want to slip up somewhere. You also need to have a more secure idea of your own financial situation and bookkeeping to make this all work.
Are These Contractor Financing Options Worth It?
While it can take a lot of research and hard work to make contractor financing plans work for your company, they can prove to be highly advantageous. As long as you’re prepared to put in the effort with the right lender and can offer a quality service before the end of the payment plan, you can make this work.
These plans can make you more attractive to clients who are on the fence about getting work done. You can then use this customer service tool and their testimonials to market yourself and bring in more clients.
