Most consumers will need to seek the support of a contractor at some point in their lives.
Whether they’re looking to upgrade their HVAC systems, repair or replace a roof, or even build a new extension, relationships with contractors are crucial.
But not every consumer has the budget required to initiate these projects on a whim. That’s particularly true in today’s economic environment, where countless people are facing growing cost of living issues. Offering financing options to your clients can be an excellent way to boost your sales, enhance relationships with customers, and differentiate yourself from the competition.
The question is, how do you know which projects or customers are the right fit for financing? This simple guide will help you make the best decisions for your company’s growth.
Determining if a Client/Project is a Good Fit for Financing
Financing is an appealing option for many customers looking to make home improvements or repairs. Offering financing to customers at the right time can make all the difference between securing and losing a project. It can even help to boost your chances of attracting future clients. One study found 79% of customers who use financing for home improvements would recommend it to a friend.
However, not every customer or project is the right fit for financing. Here are some of the key factors you should consider before you introduce financing as an option.
Project Size and Scope
First, it’s worth considering the project size and scope. Smaller projects, such as basic repairs and home improvement tasks don’t usually necessitate financing. Offering access to loans and payment plans here could just lead to more admin work for your team.
In most cases, project loans, and other financing solutions are best suited for larger, more expensive projects that would be difficult for clients to pay for out of pocket. Prioritize financing options for projects with high up-front costs, like full home renovations, extensive roof replacements, and end-to-end HVAC installations.
With Hearth’s intuitive technology, after you and your client agree on the scope and size of a project, you can instantly include a link to financing within a digital quote or estimation. This can be an excellent way to encourage clients to move forward with bigger projects, even if they’re limited in budget, reducing your risk of losing sales.
Client Budget Constraints
Perhaps one of the most obvious factors to consider when deciding when to offer financing to clients is their financial situation. If your client already has the money they need to pay for a project, there’s no need to invest in the extra work involved in offering financing.
During initial consultations with your client, pay attention to whether they express concerns about the overall cost of the project, or their ability to pay for everything upfront. At this stage, introducing financing can help to reassure customers. It’s a great way to let them know that they have the flexibility to spread the cost of a project across multiple payments.
Hearth’s financing solutions make it easy for contractors to share options with their clients throughout the initial engagement process. You can immediately send a link to your customer, and they can check their loan options and be approved for financing in no time. This can significantly increase your chances of closing a deal, and improve your relationships with your clients.
Client’s Financial Behavior and Credit
Your client’s financial behavior and credit history also play a significant factor in how suitable they’ll be for different financing options. A client with a bad credit score, or a history of bad financial decisions may not be able to follow through with a payment plan. This creates additional stress and complexity for both your company, and your customer.
Clients with good credit scores, or those needing flexible payment options, who have proven that they have the ability to make repayments on time are the best candidates for financing. Keep in mind, just because a client doesn’t have all the money required to pay for a project upfront, doesn’t mean they won’t be able to repay what they owe, if they have a steady income.
Hearth helps to ensure contractors can deliver financing to trustworthy candidates in a range of financial situations. We partner with multiple lenders, offering a wide range of solutions for those in different circumstances. This diversity ensures that clients with various credit profiles can still find a plan that works for them, without placing additional risk on your company.
Project Urgency or Complexity
Project urgency and complexity are two additional factors that may influence your decision of when and how to offer financing. Projects that require immediate action are often an excellent candidate for financing. For instance, if a customer needs to urgently repair their roof or replace a HVAC system, to care for their family, and reduce the risk of additional damage, they may need financial support.
Unpredictable issues can happen at any time, and people won’t always have the emergency funds they need to address them. Offering financing at this stage, when customers need to make quick decisions and access the help of a contractor fast, is extremely valuable. It can boost your chances of rapidly converting leads, and earn the trust and respect of your clients.
For urgent projects, Hearth’s approach to ensuring finance requests are approved quickly is essential. We make sure that clients aren’t left waiting weeks for approval, so contractors can begin work fast, even before clients have the time to secure funds elsewhere.
Competitive Advantage in Sales
Finally, one additional factor worth considering is how much you need a competitive advantage to convert a client. Many people looking for contractors have plenty of different options to choose from. If they’re struggling to decide between your company and a competitor, offering access to financing could be an ideal way for your brand to gain a competitive edge.
In a competitive bidding situation, pay attention to how many similar quotes and estimations your clients might be getting from other companies. Letting your customers know at this stage that they can pay for your service in various flexible ways could be the key to making your bid more attractive.
With Hearth’s software, you’ll be able to present flexible financing options to customers at any stage, linked to quotes, estimations, and more. Our straightforward platform, with no dealer fees, ensures any contractor can include financing in their sales pitch, and distinguish themselves from the competition.
How Hearth Makes Offering Financing Simple
As a leading software provider, focused on addressing the unique goals of contractors, Hearth offers a range of solutions that help our clients to grow. Our flexible financing options are just one of the ways we’ve helped countless companies to boost their sales and strengthen their relationships with clients.
From our easy-to-use digital platform, contractors can instantly access a range of financing options, through our dedicated partnerships with leading lenders. There are absolutely no costly per-project dealer fees to worry about, and you don’t need to prove you’ve spent a specific number of years in the industry before you get started.
We offer loan options ranging from $1K, to $250k, ensuring you can support clients from a range of different backgrounds with various unique needs. Plus, our payment plans are highly flexible, giving your customers the comfort and confidence they need to move forward with projects, while ensuring you don’t have to worry about issues with your cash flow.
Hearth makes it easy to offer financing at the right moment during client negotiations, with convenient links you can email and text to customers, or embed in quotes, contracts, and invoices. Customers are pre-qualified with a short online form, and can instantly review their estimated monthly payment options, without damaging their credit scores.
Plus, our quick approval process ensures that most clients can access their funds within as little as 24 hours, ensuring you can get started with a project straight away. You can even track the progress of your clients through the funding journey with our intuitive dashboard.
According to our clients, Hearth financing options can help teams close 17% more jobs, and even increase their average annual ROI by 12 times!
Use Financing Strategically to Close More Deals
Offering financing to your clients is an excellent way to accelerate the growth of your contracting company. Flexible financing solutions from Hearth make it easy for contractors to close more leads, improve client spending power, and differentiate themselves from the competition.
Plus, our flexible, user-friendly financing solution can even help you build better relationships with your clients, improving your chances of repeat transactions in the future.
When you’re wondering whether to offer financing to your customers, remember to ask:
- Is the project large or expensive?
- Has your client expressed concerns about project costs?
- Does the client have a good credit score, or financial history?
- Is the project complex or urgent?
- Will offering financing give you a crucial competitive advantage?
If the answer to any of these questions is “yes”, then you should be working with Hearth to provide flexible financing to your customers. Contact our team today to learn more about our innovative financing tools, and discover how you can increase project sizes, and close rates by offering unique payment options at exactly the right time.
Contact Hearth to get started today.
