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Driveways and patios: Offering finance

Paving a driveway or adding a patio can be an expensive purchase. Some customers may be unwilling or unable to pay for it all in one go and would prefer to pay a deposit and spread the balancing payment over several months or years.

You may want to offer credit to these customers through a specialist finance company. Several such companies exist and, between them, they offer a range of different finance packages. Some of the finance packages available which you might use to attract customers include:

  • standard interest bearing credit
  • subsidised interest rate credit (a very low interest rate)
  • interest free credit (0% interest)
  • deferred payment (buy now pay later) credit
  • high risk credit (for customers who might normally be turned down by a finance company)

When you make sales on finance you will have to fill in a credit application with the customer. Your finance company will then give a decision on whether to accept the application. All being well, the transaction will be completed quite quickly and you will receive payment from the finance company within a few days. Usually, the customer will pay a certain amount as a deposit. You will usually also be paid commission by the finance company. This is normally based on a percentage of the value of the sale and paid to you separately at the end of the month.

Most finance companies will expect you to meet certain requirements and standards before agreeing to do business with you. Some will only deal with businesses that have been trading for a certain minimum length of time, often two years.

Shop around when it comes to choosing which finance company you will deal with. Their terms and working practices vary. When choosing which one is best suited to your business, bear in mind the following:

  • what type of finance packages are most likely to appeal to your customers
  • how promptly will you receive payment from the finance company
  • how much commission are you offered
  • how quickly will your customers' credit applications be turned around
  • what level of back-up and support is available to you

You will normally need consumer credit authorisation if you want to offer finance to your customers (interest free credit agreements can be exempt from the authorisation requirement under certain circumstances). Authorisation is granted by the Financial Conduct Authority (FCA) so long as certain conditions are met. For more details visit the consumer credit section of the FCA website.

An alternative way of enabling your customers to pay on credit would be to accept credit card payments. Smartphone apps are available to enable businesses like driveway specialists to accept card payments easily when they're out and about.

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