At the point of sale, high upfront costs, limited payment options, or a slow approval process can interrupt the purchasing process — even when customers are ready to move forward. This is especially common in healthcare, where services are often time-sensitive and not always covered by insurance.

To reduce this friction, many businesses turn to in-house financing, a model that allows customers to pay later through structured payment plans instead of covering the full upfront purchase price.

By keeping financing in-house, businesses can streamline the sales process, improve the customer experience, and increase sales. Understanding how in-house financing works, how it compares to other types of financing, and what it requires operationally is an important first step in deciding whether it’s right for your business.

In-House Financing: A Definition and How It Works

In-house financing is a type of consumer financing through which a business offers funding directly to customers rather than referring them to traditional banks, credit unions, BNPL providers, or other financial institutions. Instead of working with third-party lenders, the business presents financing options at the point of sale, enabling customers to repay the purchase price over time.

At a high level, in-house financing replaces an upfront payment with monthly payments based on pre-agreed loan terms. Customers apply during the purchasing process, and the business determines eligibility using its own criteria.

Then, the business manages repayment internally through a dedicated financing department. In practice, businesses might offer several in-house financing options depending on purchase size, customer needs, and internal risk tolerance.

While requirements vary by business, in-house lending generally involves a short application, internal underwriting, and fast decisions. Some businesses incorporate data from credit bureaus as part of the application process, while others rely on alternative criteria to make faster decisions that open up eligibility for those with low credit scores or poor credit histories.

In-House Financing vs Third-Party vs Traditional Financing

Businesses evaluating financing options generally compare three approaches: in-house financing, third-party financing, and traditional financing. The differences come down to control, risk, and operational effort.

In-House Financing

Compared to traditional lenders, in-house financing gives businesses more control at the point of sale but also requires greater internal oversight. With this type of financing, the business has to manage the entire lending process.

Among other responsibilities this includes making credit decisions, handling repayment, and managing defaults. While this approach can work for businesses with strong internal systems, it increases operational complexity and financial exposure.

Key characteristics of in-house financing include:

• Full control over loan programs and payment terms
• Internal management of underwriting, credit checks, repayment, and loan management
• Greater flexibility paired with higher operational responsibility

Third-Party Financing

Third-party financing shifts much of this responsibility to external providers. Third-party lenders — including fintech companies, lending platforms, and other modern lending institutions — handle loan approval, credit checks, repayment, and refinancing.

Cherry Payment Plans, for example, is a third-party BNPL provider that helps healthcare practices offer financing without the risk or administrative burden. With a 60-second application that doesn’t hurt credit score, patients can apply and get an instant decision on loans up to $50,000 with terms as long as 60 months and true 0% APR for qualifying borrowers. Over 80% of applicants are approved across credit profiles (even those with less-than-perfect credit), boosting treatment acceptance for providers. The business is paid up front by Cherry, and then Cherry manages the entire repayment process. Combined with the lowest merchant fees in the industry and exclusive approvals, Cherry allows providers to grow their business while serving more customers.

With third-party financing:

• External providers manage credit decisions and repayment
• Financing solutions integrate into POS systems for real-time approvals
• Businesses reduce credit risk and administrative burden while maintaining a smooth customer experience

Traditional Financing

Traditional financing, such as bank loans from traditional banks or credit unions, follows a more rigid lending process. These financial institutions rely heavily on credit scores, credit history, and formal underwriting, which can limit access and slow approvals.

Traditional financing typically involves:

• Stricter eligibility requirements and longer approval timelines
• Less flexibility in loan terms and payment schedules
• Lower rates for highly qualified borrowers
• Limited practicality for time-sensitive purchases, especially in healthcare

Understanding these differences helps businesses choose financing options that align with both customer needs and internal capabilities.

Pros and Cons of In-House Financing

In-house financing can be an effective growth tool, but it also shifts responsibility and risk onto the business. Understanding both sides helps business owners evaluate whether managing financing internally aligns with their operational capacity.

Benefits of In-House Financing

One of the main advantages of in-house financing is control. Businesses decide how financing is offered, how flexible payment options are, and how the experience fits into the overall sales process. Because financing stays within the business, it can feel more seamless for customers.

Key advantages include:

• Control over the loan terms, payment schedules, down payment requirements, and financing plans
• Flexible financing options that support a range of customer needs and financial situations
• A smoother customer experience with point-of-sale financing
• Higher customer satisfaction, stronger customer loyalty, and more repeat business
• The ability to increase sales by offering pay-later payment plans instead of relying solely on credit cards or bank loans

In healthcare settings especially, these benefits often lead to higher treatment acceptance and fewer delays related to affordability.

Disadvantages of In-House Financing

While in-house lending offers flexibility, it also places the burden of lending on the business itself. Every loan represents a financial commitment the business has to manage over time.

Common challenges include:

• Full exposure to credit risk and responsibility for underwriting and creditworthiness
• Ongoing management of credit checks, lending, payment collection, and refinance requests
• Potential strain on cash flow as revenue is collected over time rather than up front
• The need to charge higher interest rates to offset default risk
• Added compliance and risk management complexity as the customer base grows

For many small businesses and healthcare practices, these demands can quickly outweigh the benefits without additional support.

Who In-House Financing Is Best For

In-house financing is best suited for businesses that want full control over financing and are prepared to manage lending internally. This often includes companies with stable cash flow, predictable demand, and the resources to support borrowing and repayment over time. It’s commonly used across a range of businesses, including:

• Healthcare providers, where patients pay for treatment over time.
• Car dealerships, where in-house financing supports car buying for both used and new vehicles at the point of sale.
• Home services and specialty retail, where higher-ticket purchases benefit from flexible monthly payments.

From the borrower’s perspective, in-house financing can appeal to customers facing large upfront costs or limited payment options. When implemented thoughtfully, in-house financing can align business control with customer access — but only for organizations equipped to manage the operational and financial complexity.

How to Offer In-House Financing Successfully

Build a Clear Financing Program

Offering customer financing successfully requires a structured approach. Businesses need a clearly defined financing program that outlines loan options, loan types, eligibility requirements, and payment terms that align with both the business model and customer expectations. Financing criteria shouldn’t come from guesswork, but instead be guided by real factors such as purchase size and customer behavior. Consistency in how financing is presented across the sales process helps reduce confusion, improve transparency, and support better on-time payments.

Key takeaways:

• Clearly define the type of loan, loan amounts, down payment expectations, and payment schedules upfront
  
• Use simple, easy-to-understand financing plans that customers can quickly compare
  
• Set clear eligibility criteria to support consistent credit decisions
  

Create the Right Operational Setup

Operationally, many businesses create a dedicated financing department or digital finance center to manage loan applications and customer communication. Technology and automation play an important role in streamlining the loan process, enabling pre-approval and real-time decisions at the POS, and reducing administrative strain on staff while maintaining a smooth customer experience.

Key takeaways:

• Centralize loan applications and customer information to reduce manual work
  
• Use automation to streamline approvals and minimize delays at the point of sale
  
• Ensure staff know where to direct financing questions and how to explain payment options
  
• Allocate resources that clients and potential customers can use to get answers, like online chat or a customer service phone number
  

Manage Risk and Repayment Effectively

Risk management is an ongoing priority for any in-house lending program. Businesses must actively monitor credit risk, set appropriate loan amounts, maintain clear payment schedules, and manage payment collection effectively to protect cash flow and the bottom line. In healthcare settings, staff training is especially important, as clear and empathetic conversations around payment options and repayment expectations directly influence trust and overall customer satisfaction.

Quick tips:

• Monitor on-time payments and address missed payments early
  
• Use consistent payment collection processes to reduce delinquencies
  
• Train staff to discuss repayment expectations clearly and professionally

FAQ: In-House Financing for Healthcare Businesses

Is in-house financing risky for my business?

In-house financing carries more risk than third-party financing because the business is responsible for credit decisions, missed payments, and collections. Without clear eligibility criteria and payment policies, late payments can directly impact cash flow and internal resources.

Do we need to run credit checks to offer in-house financing?

In-house lenders can choose how to evaluate their borrowers. Credit checks are not always required, but they can help reduce risk for higher-cost services. Some rely less on traditional credit checks and more on internal criteria, which may allow borrowers with bad credit or no credit history to qualify.

How do missed or late payments affect cash flow?

Because the business is funding the purchase itself, missed payments reduce expected revenue and can create gaps in working capital. This is why many businesses limit in-house financing to smaller loan amounts or shorter repayment terms.

How much should we offer through in-house financing?

Most businesses set financing limits based on average transaction size and the amount they can afford to carry in receivables. In healthcare and other service businesses, in-house financing is often capped to avoid overexposure.

When does in-house financing make sense compared to third-party options?

In-house financing can work for smaller purchases or short-term payment plans. For larger services or longer terms, third-party financing is often more sustainable because it shifts credit risk and payment collection away from the business.

Offer Financing Without the Risk

In-house financing can be a powerful way for businesses to reduce friction at the point of sale, improve affordability, and increase sales — especially in healthcare, where timing and flexibility are crucial. By allowing customers to pay later through structured payment plans, businesses can support better customer experiences while facilitating the purchasing process. At the same time, in-house lending requires careful consideration of underwriting, credit risk, repayment, and ongoing loan management.

For some businesses, in-house financing models such as buy here pay here may be a good fit. For many healthcare providers, however, the operational complexity and financial risk of running an internal financing program make third-party healthcare financing a more practical alternative.

Cherry is a third-party financing provider built to help healthcare businesses offer patient-friendly financing without taking on the burden of loan management. With flexible loans, a high approval rate, and the lowest merchant fees in the industry, Cherry enables practices to support their patients while protecting their bottom line. Learn more about how to transform your practice with patient-friendly financing. Claim your personalized Cherry demo here.