Am I Reading This Right? Consumer Credit

[cr0ft]

Hi all,

Fees, refunds and payments for credit licences  - The Office of Fair Trading

Is it just me or has offering consumer credit suddenly become much more affordable & realistic for small businesses? This opens up the door to things like service plans paid for on monthly direct debit and other things.

 

[IDCHAPPY]

Hmm, call me old fashioned but i like to be paid on completion :lol:

 

[turnpin]

Hmm, call me old fashioned but i like to be paid on completion :lol:

I agree ...but prefer to be paid upfront lol.......regards Turnpinunk:

 

[cr0ft]

Sure thing but BG and the like have a large market off people who pay on credit and we all know they pay a premium for it.

Of course, you can still get non-payers but then you can get them in all walks of life.

 

[Leo21]

Times are a changing, it may well be the way forward. But! I can't be arsed.

 

[Ray Stafford]

There are a couple of ways of going about this.

One is to offer your own credit deal. I think you need fairly deep pockets to do this, and also some expertise in running a cost effective accounts receivable operation.

A better option is to broker credit for a 3rd party provider, so you get paid on completion and the finance company get the grief thereafter. Obviously they are also going to take a lot of the profit, since they are bearing both the risk and the administrative expense.

 

[Masood]

There are a couple of ways of going about this.

One is to offer your own credit deal. I think you need fairly deep pockets to do this, and also some expertise in running a cost effective accounts receivable operation.

A better option is to broker credit for a 3rd party provider, so you get paid on completion and the finance company get the grief thereafter. Obviously they are also going to take a lot of the profit, since they are bearing both the risk and the administrative expense.

I wonder if we could collectively arrange a deal with a credit provider? Reduced admin fee if we get 100 members to sign up or similar...

As for taking a chunk of the profit, I'd offer credit as an optional extra and add the credit broker's fees to my quote as an arrangement fee (assuming that's legal)..

 

[cr0ft]

Ray you probably have more experience than most in offering credit I would guess. If you don't mind me asking roughly what percentage of your customers would default on accounts and not pay them full stop without legal action. Are we talking 1 in 1000, 1 in 100? I appreciate it's fairly commercially sensitive but rough ideas would be handy. If I knew that I would allow an amount on the quote for bad debts.

Our business has been fortunate and has been able to build up a decent balance in the bank over the last couple of years and so I could afford to wait for the cash. I think you can get non-paying customers whichever route they pay by.

 

[Ray Stafford]

Ray you probably have more experience than most in offering credit I would guess. If you don't mind me asking roughly what percentage of your customers would default on accounts and not pay them full stop without legal action. Are we talking 1 in 1000, 1 in 100? I appreciate it's fairly commercially sensitive but rough ideas would be handy. If I knew that I would allow an amount on the quote for bad debts.

Hi Keiran.

Will PM you.

Ray

 

[cr0ft]

Thanks Ray, appreciate it.