How does sales financing work?

Does sales financing work and, above all, how? This question may arise if you have already heard this term but have not yet looked into it further. The word sales financing is appearing more and more frequently everywhere because many companies have recognized the advantages and the great leverage effect of it and are therefore making clever use of sales financing.

So that you are also in the picture, we explain here how sales financing works, what advantages it brings for sellers and customers and how you can offer it yourself.

In order to explain the function of sales financing, we will first look at the term sales financing.

What is sales financing anyway?

Sales financing is a form of financing, i.e. payment in installments. Leasing, for example, can be a form of financing. The seller offers the customer to pay for the product in installments over several months instead of paying the full amount immediately.

This can be done in a personal sales meeting or as a payment option in a web store or on a sales platform.

What are the advantages of sales financing?

The option of paying in installments thanks to sales financing offers advantages for both the seller and the customer.

As the monthly installments are lower than the total amount, the customer can afford a product that might otherwise be too expensive for them. Consequently, he buys the product. The advantage for the seller is that they sell more and increase their turnover.

But the buyer also has advantages: They can afford the product even without a large amount of equity. If the buyer is a company, they can declare the installments in full as business expenses.

How does sales financing actually work?

After the seller has offered the installment payment and the customer has accepted it, both parties must complete the formalities. This includes the following points:

• The creditworthiness of the buyer must be checked.
• A suitable financing partner must be found, unless the seller grants the buyer a direct loan.
• The amount of the installments and the number of months that the installments are paid must be specified.
• A contract must be drawn up and concluded.
• If the seller has granted a direct loan, they must now ensure that the customer pays the installments regularly. If the seller has a financing partner, the financing partner takes care of this, while the seller has already received the full amount from the financing partner.

What is the easiest way for a seller to offer sales financing?

The easiest and most effective way to do this is to contact a leasing broker. A leasing broker offers many advantages over a bank or leasing company , which you can read about here.

The leasing broker works with you to plan the best sales financing concept for you and implements it step by step with you. This includes the search for suitable financing partners and the implementation of sales financing in your sales transaction. He also takes care of credit checks and the conclusion of contracts and is on hand to provide you with advice and support.

You can read all about the planning, concept and implementation of sales financing here.