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Consumer Financing Can Improve Cash Flow, Help to Close Sales

Originally published: 11.01.09 by Bruce Christensen


Programs are fast, simple to use, and flexible.

Affordability is one of the biggest obstacles hvacr dealers must overcome to make a sale. Heating and air conditioning equipment is a big-ticket item, so cost is always top-of-mind with consumers. In many cases, a new unit may be an unplanned expense, forcing a consumer to max out a general-purpose credit card that they need for day-today purchases. That’s why a consumer credit program is a powerful sales tool that helps consumers get the equipment and service they need at payments that fit their budgets.

“One hundred percent of our business is residential and commercial heating and air conditioning work, and about 60% of it is financed with one of our lending partners,” said Wade Sedgwick, president of Pronto Heating and Air Conditioning in Edina, Minn. “Consumer financing is one of the most important aspects of our business. You have to provide customers with viable payment options. Otherwise, you will be missing sales opportunities every day.”

While most business owners recognize the money obstacle in the sales process, they don’t fully understand how a consumer credit program can help to increase sales. There are a variety of reasons for this, including lack of time to research the benefits of a financing program, a misunderstanding of how such programs actually work, and uncertainty about how to implement a program within their businesses. Taking time to get the correct information is worth it,

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though, according to Sedgwick.

“I don’t understand why all hvacr dealers don’t have a consumer credit program,” Sedgwick said. “Most of the major credit providers will be happy to help you get set up. They even provide sales training. We get great support from GE Money, and they have been available whenever we’ve asked for help.”

Improved Cash Flow

A lot of dealers think that financing programs either cut into profits or increase costs. This opinion overlooks the value that consumer credit brings to the customer and the positive impact a financing program has on cash flow. As is typical with any credit program, there is a minimal transaction cost associated with offering extended terms or deferred interest promotions. But according to users, the benefits outweigh the additional cost.

“We offer a financing plan that has no payments or interest for 12 months. This program adds an additional 7 to 8 percent to our price sheet,” said Sedgwick. “Our price is a little higher than some of our competitors, but we provide a very high level of service, and financing is one of the most important value-added services we provide.”

Also, Sedgwick explained, his customers appreciate the convenience of sitting at the kitchen table and finalizing their purchases. The application process is simple, and credit decisions are made within minutes, so there is no need for customers to arrange their own credit plan. Furthermore, the program benefits Sedgwick’s company by enhancing cash flow. For example, businesses receive funding within 48 hours of all transactions from some lenders. Another advantage is reduction of administrative tasks, because the lender services the account, including managing statements, collections, and related account-holder services.

Minimal Training Time

Another common misconception about financing programs is that they are complicated and difficult to explain. Not so, said Sedgwick.

“To anyone who is intimidated by consumer financing, I would suggest they start with one or two basic credit plans. Do some role-play exercises with your sales team and practice filling out some credit applications. A one-hour meeting with your sales people should be more than enough time to teach them everything they need to know to be successful using a credit program.”

Sedgwick said most of his sales reps can close a deal with a single credit application sheet and a mobile phone in a matter of minutes. For those who carry a laptop, they can submit credit applications via the Internet if the credit provider permits.

For example, GE Money created its Business Center Web portal for clients. The portal enables all dealerpartners to connect 24/7, view daily sales and other reports, manage their financing program, and instantly submit credit applications. They also have access to online sales training modules, marketing tools and support functions. All GE Money partners have password-protected access to the site. 

Consumer financing provides important benefits to both the customer and dealer, but there is another reason that credit programs are a must-have for every hvacr business: They provide a powerful marketing tool.

Want to generate sales during a slow month? Try a special financing incentive. At any given time, businesses can choose from a menu of available promotions they can offer — such as a special low interest rate, extended terms, or rebates — which can create excitement and new sales opportunities. This is especially true during tough economic times. Money and job security may be scarce, so the opportunity to get extended terms or low rates could prompt a consumer to make the decision to invest in a new hvacr system.

Consumer financing programs can be one of the most important items in your sales toolkit and a competitive advantage, so it’s important to choose the right lending partner for your business. When considering working with a consumer lender, look for one with experience in your industry and in consumer financing programs that also brings value in the areas of sales training, technology, and robust promotional options.

Offering consumer credit can help to enhance your cash flow, close more deals, and generate marketing excitement. They are easy to implement and use. No special equipment is needed, and dealers can have a new program up and running within a few days of signing up. In short, there are many good reasons to offer a consumer-financing program.

Bruce Christensen is vice president and general manager of GE Money’s Home Improvement division. He and his team provide consumer-financing programs to thousands of hvacr dealers nationwide.


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