The Facts About Customer Financing
Friday May 22nd, 2020
The benefits of offering customer finance are many and varied, as you’ll know if you’ve read some of our other articles on the subject. In a nutshell, Duologi’s flexible payment solutions offer your business a clear route to:
– Increased sales
– Better rates of customer satisfaction and retention
– A direct advantage over competitors
– A fully managed credit service handled by our team of finance experts
– Seamless online and in-store integration with your existing business model
Of course, consumer credit is also an area in which accountability and transparency are key – particularly with regards to meeting FCA guidelines. Happily, the legal implications around issuing point-of-sale consumer credit agreements through your physical or online business are relatively easy to navigate.
Even better, your dedicated Duologi finance expert will always be on hand to guide you smoothly through the processes of achieving full compliance. Let’s take a quick look at what that process might involve to begin with…
CCLs and FCA authorisation
You may have read about Consumer Credit Licenses (CCLs). These were a method by which the OFT (Office of Fair Trading) kept track of organisations set up to offer particular types of customer credit. Since the FCA (Financial Conduct Authority) took over the regulation of consumer credit in 2014, these have been replaced by the FCA authorisation process. One of the first subjects you’ll need to address when deciding to offer customer finance will be whether or not you need to be authorised by the FCA. Authorisation serves multiple purposes:
– FCA authorisation requirements help to ensure that only enterprises with an appropriate business model and management structure are approved for use of certain longer-term (or higher interest) financing solutions
– Being authorised by the FCA means that you’re legally obligated to follow key financing rules with regards to sales contracts (as outlined in the FCA Handbook), as well as relevant sections of the Consumer Credit Act (CCA) and Consumer Protection from Unfair Trading Regulations
– As well as helping the FCA ensure that you’re fully compliant and transparent in your approach to credit options, authorisation therefore also offer a measure of protection and confidence for the prospective buyer – they serve as a reliable indication that yours is a proactive, professional and customer-focused business
Do I need a license to offer customer finance?
As noted above, not all credit arrangements strictly require authorisation by the FCA – this will depend largely on your individual choices about which customer finance packages you want to offer, and the specifics of how they work. Broadly speaking:
– You will have to apply for authorisation if you’re offering payment plans that extend beyond a period of one year, or if you’re aiming to charge any interest on scheduled instalments
– However, if you’re only offering customer finance for periods of 12 months or less, and exclusively on a 0% finance (i.e. wholly interest free) basis, then you may not need authorisation
If you’re setting up customer finance options that do require FCA authorisation, you’ll be guided through the relatively straightforward application process by your assigned Duologi team member.
To begin the application, you’ll need to provide some key documentation about your business and the exact offer you’re providing. In the first instance, this might include such things as credit package draft agreements, pre-contract information and promotional literature – anything that helps the FCA to clearly see what it is you’re offering your customers.
Much of this credit documentation can be provided directly by Duologi – and we’ll also help you identify and organise any information that needs to come from you or your company.
Duologi makes it easy
As a forward-thinking, customer-focused business just like yours, we pride ourselves on making these processes run as smoothly for you as you’ll want them to for your customers. To that end, once you’ve got your business set up to offer a range of flexible payment solutions, we’ll manage every aspect of your POS customer credit arrangement for you.
Duologi’s dedicated team of relationship managers will be your personal point of day-to-day contact, from initial set-up and training right through to helping your sales grow. Not only does this mean you can get on with running your business free from distraction or complication, it also means that your financing arrangement doesn’t interfere with other key metrics such as cash flow or employee time.
Our technologies are easy to integrate with your own, with plug-ins available for all major eCommerce platforms, and we’re happy to provide any point-of-sale marketing materials to help you advertise your new customer finance options to your buyers.
For more detailed information about offering consumer finance arrangements, or to talk to us further about integrating any aspect of our services into your existing business, feel free to get in touch any time.