Customer Financing Plans: What They Really Do to Your Cash Flow

5 min read · Cash Flow

Customer Financing Plans: What They Really Do to Your Cash Flow

The short answer

Customer financing lets a homeowner pay for a system over time while you, in most programs, still get paid close to the full amount upfront from the financing company, minus a dealer fee. Done through a reputable third-party lender, it can actually help your cash flow by converting a big-ticket sale into fast cash instead of a slow-paying customer. The details, how fast you are funded and what the dealer fee costs, are what separate a good program from one that quietly eats your margin.

Key takeaways

  • Most third-party financing programs pay the contractor upfront, not over time.
  • The dealer fee is the real cost to you and varies significantly between providers.
  • Financing can convert a big-ticket, slow-decision sale into a fast close and fast payment.
  • Read the funding timeline carefully. Not all programs pay out equally fast.

The common misunderstanding

Some contractors assume offering financing means waiting on payments the same way a payment plan would, trickling in slowly over months. In most third-party programs, that is not how it works. The financing company pays you close to the full contract amount shortly after the job is approved and completed, and the customer then pays the lender back over time. You are not usually the one carrying the receivable.

What it actually costs you

The tradeoff is a dealer fee, a percentage the financing company keeps for taking on the customer's credit risk and payment collection. That fee varies meaningfully between providers and financing terms, sometimes several percentage points of the job. It is a real cost that belongs in your pricing math, similar to a credit card processing fee, just usually larger.

What to check before signing with a provider

Compare dealer fees across a couple of providers rather than accepting the first one offered. Ask specifically how fast you are funded after a job closes, some programs pay in a couple of days, others take longer. And read the fine print on what happens if a customer defaults or disputes the charge. A financing program can be a real cash flow and sales tool, but the details determine whether it helps you or just adds a hidden cost.

How financing actually pays you

Frequently asked questions

Do I get paid immediately when a customer finances a job?

Most reputable third-party programs pay the contractor shortly after the job is completed and approved, not over the life of the loan. Confirm the exact funding timeline with your provider.

What is a dealer fee?

It is the percentage the financing company keeps from your payout in exchange for extending credit to the customer and handling collections.

Does offering financing increase average ticket size?

Many contractors find that financing options do increase close rates and average ticket size, since it lowers the upfront cost barrier for the customer.

Make financing work for your cash flow, not against it

911 Bookkeepers helps HVAC contractors track financed sales and dealer fees correctly in Xero. Book a free books review at https://911bookkeepers.com or call (225) 274-6576.

Jeremy Brewer is the founder of 911 Bookkeepers LLC in Baton Rouge, Louisiana. He came up through the HVAC trade and works as a licensed paramedic in EMS. He is a Xero Certified Advisor. 911 Bookkeepers is built for the trades.

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