Today’s consumers expect flexibility and convenience — especially when it comes to the payment solutions available to them. Whether you run a med spa, dental clinic, veterinary office, or any other service-based or retail business, offering financing to your customers can boost sales, improve customer satisfaction, and give you a competitive edge.

Why Offer Customer Financing?

Customer financing works by allowing customers to purchase a product or service and pay over time, rather than paying the full amount at the point of sale. This not only removes the burden of upfront payment, but also opens the door to new customers who might otherwise walk away.

For example, let’s say you own a healthcare service business offering $2,000 skin rejuvenation packages. With traditional payment methods, customers may hesitate to make such a large purchase. But by offering a financing plan of $167/month over 12 months at 0% APR you could:

• Boost sales by removing the upfront cost hurdle.
• Improve cash flow with full payment from a third-party financing provider.
• Attract new potential customers seeking affordability.
• Increase loyalty through a better overall customer experience.

Customer financing can be managed either by the business itself (in-house financing) or through a third-party financing provider (such as a bank, lender, or fintech company).

Types of Customer Financing Solutions

Understanding customer financing options will help you choose the best fit for your business and customer base. Generally, customer financing falls into two categories:

1. In-House Financing

With in-house financing, you extend credit directly to your customers without involving a third-party provider. While this gives you full control over the financing process, including repayment terms and credit checks, it also increases your credit risk and administrative responsibilities related to payment collection and receivables. This type of financing is best for service businesses with loyal customers and the resources to manage accounts receivable.

2. Third-Party Financing

Third-party financing providers like fintech companies, lenders, and financial institutions handle the entire financing process from start to finish. Loan application approval, credit checks, payment processing, and debt collection are all managed on your behalf.

These customer financing programs offer a streamlined experience for both business owners and customers. They’re best for businesses that want to outsource financial services to reduce the risk and overhead associated with direct lending.

Types of Third-Party Financing Providers:

• Buy Now, Pay Later (BNPL) Providers were made popular in retail and e-commerce (for example, Afterpay, Klarna, and PayPal Pay Later) but are increasingly being used in healthcare. Cherry Payment Plans — the preferred first choice of 80%+ of healthcare providers versus competitors — is one such specialized BNPL lending partner. These financing solutions offer flexible, often interest-free installment plans at checkout, making it easy for customers to split the cost of treatment into weekly or monthly payments.
• Healthcare & Service-Based Financing Companies specialize in sectors like dental, veterinary, cosmetic, and med spa, offering flexible payment options tailored to patients' needs and varying credit scores.
• Fintech Lenders are modern, tech-forward financing platforms that provide personal loans or installment loans with fast digital approval, seamless UX, and flexible repayment options across industries.
• Retail Credit Card Issuers are financial institutions that issue private label or co-branded credit cards on behalf of a business, helping increase customer loyalty and encourage repeat purchases through revolving credit.
• Embedded Finance Platforms offer API-driven solutions that integrate directly into your checkout or sales channels, offering customizable financing flows while maintaining brand control and a seamless customer experience.

Choosing the Right Financing Solution

Choosing the right financing solution is dependent on a number of factors from your customers to your appetite for risk. Take these steps to determine which option is best for you:

1. Understand Your Customer Base

Start by evaluating your customers' financial behavior and needs:

• Do they often ask for payment plans or mention that price is a barrier?
• Are they likely to qualify for traditional credit, or will you need to find a provider that approves borrowers with a broad range of credit scores?
• Would they prefer interest-free, short-term options or longer installment loans?

2. Define Your Goals

Ask yourself: what are you trying to achieve by offering financing?

• Do you want to boost sales or increase average order value? BNPL or installment loans can encourage more spending.
• Do you need to improve cash flow? Choose a provider that pays you upfront.
• Are you focused on building customer loyalty? Consider in-house financing or a co-branded credit solution where you control the customer relationship.

Your financing strategy should align with your bottom line, customer retention efforts, and operational efficiency.

3. Evaluate Your Business Capabilities

Picking a financing solution isn’t just about what your business can handle — it’s about what you want to handle. Many providers that choose third-party financing don’t want the added risk and overhead associated with offering in-house customer financing. Ask yourself:

• Does your team want to handle credit checks, payment collection, and repayment tracking?
• Do you have systems in place to manage accounts receivable and credit risk?
• Is your business able to wait on payments, or do you need full payment upfront?

If you don’t want to take on the risk or don’t have the resources for this, a third-party provider may better meet your business needs.

4. Compare Financing Providers

If you’re leaning toward third-party financing like many businesses, compare them based on:

• Credit application process (fast, mobile-friendly, user experience)
• Approval rates (how many of your customers will qualify?)
• Payment terms and interest rates
• Additional fees (for you and your customers)
• Flexibility (can plans be customized to meet customer needs?)
• Customer support (will they handle customer support, or will your team?)
• API or POS integration (can it integrate with your system?)
• Industries served (some specialize in healthcare, retailers, or service businesses)

Make sure the provider supports your sales channels (in-store, online, or both) and offers a strong customer support experience.

Implementation Tips for Business Owners

1. Train Your Team

Make sure your staff understands how financing works and can explain payment plans and eligibility clearly to customers during consultations or checkout.

2. Promote Financing Offers

Use social media, email marketing, and in-store signage to promote your financing offers. Highlight interest-free options, flexible payment plans, and easy application processes.

3. Integrate with Your Systems

Many financing providers offer API integrations with your CRM or point-of-sale system to streamline the financing process and payment collection.

4. Monitor Metrics

Track metrics like conversion rates, average order value, and receivable turnover to measure the impact of your financing program on your bottom line.

The Pros and Cons of Customer Financing

Whether or not you should offer customer financing depends on your business. Here are a few pros and cons to consider.

1. Pro: Boost Sales and Increase Order Values

Offering consumer financing can directly increase sales and average order value. By breaking up large expenses into manageable monthly payments, customers are more likely to buy immediately than delay or walk away entirely due to the upfront cost. Whether you're selling cosmetic procedures or medical treatments, payment plans can improve conversion rates and your bottom line.

2. Pro: Improve Cash Flow and Working Capital

For small business owners, maintaining healthy cash flow is critical. Financing options allow customers to pay later while your business receives payment upfront (especially through third-party funders), which keeps accounts receivable in check and strengthens working capital.

3. Pro: Enhance the Customer Experience

Today’s consumers expect a seamless and personalized customer experience. Offering flexible payment options shows you understand your customers’ financial needs and can increase customer satisfaction. This, in turn, leads to greater customer loyalty and more repeat business.

4. Con: Potentially Increase Financial Risk

When you offer in-house financing, your business becomes the lender. That means you carry the risk of non-payment, late payments, or partial payments. Unlike credit card providers or third-party financing companies, most small businesses don’t have the infrastructure to assess customer creditworthiness or absorb defaults.

This risk is particularly concerning for startups or small business owners who rely on steady income. Without careful vetting of borrowers, in-house financing can become a liability instead of a growth strategy.

5. Con: Add an Administrative Burden

Offering financing isn’t a “set it and forget it” option if you're not using a third-party provider. If you manage it in-house, it adds layers of operational complexity. Tasks you’re responsible for include:

• Designing payment plans and setting eligibility requirements
• Evaluating customer credit history
• Handling payment processing and tracking repayment
• Following up on missed customer payments or delinquencies
• Generating reports for accounting, legal, and tax purposes

If your team is small, these responsibilities can quickly pull attention away from core activities like customer service, sales, or marketing. And if you’re not using a CRM or dedicated software, managing financing manually can lead to errors, disputes, and lost revenue.

6. Con: Unnecessarily Complicate Your Pricing

One of the most overlooked considerations is: Does my business actually need to offer financing? In some cases, financing may not add much value:

• Low-ticket purchases (e.g., $50-$200): Customers typically use credit cards or pay upfront without hesitation. Splitting a $100 service into four payments may add friction rather than convenience.
• Your audience doesn’t ask for or value financing options (e.g., cash-only or repeat customers with flexible spending).
• Your average order value is already strong, and adding financing won't move the needle.

In these cases, the time, cost, and complexity of offering financing may outweigh the benefit. Just because financing is popular (especially with BNPL providers and fintech tools) doesn't mean it's a good fit for every business model.

Treat More Clients with Cherry Payment Plans

Offering financing to customers is more than a tactical move — it's a strategic business decision that supports long-term growth. Whether you offer third-party financing or choose to manage it in-house, the right program can increase revenue, customer satisfaction, and improve your bottom line.

When you partner with Cherry, you enable more clients to say “yes” to healthcare procedures without taking on any risk or additional work. From credit approval to collecting payments, we handle it all so you can focus on offering first-class treatment.

A 35-second soft-credit-check application, instant credit decisions with an approval rate up to 90%, a wide range of terms (1-60 months), flexible loan amounts (up to $65k), and the lowest merchant fees in the industry are just a few of the reasons over 60,000 medical practices choose to lead with Cherry 5x more often than PatientFi, CareCredit, Sunbit, and other lending partners. Find out why so many providers have seen a major boost in revenue, conversion rate, and patient volume since adopting Cherry Payment Plans. Book your personalized demo today.