This is a great system that is perfect for small businesses. I have personally seen this program generate a 25-40% increase in sales simply by telling people you offer “No Credit Check Financing”. This article will show you step by step how to set it up and many ideas related to advertising the plan.
LEGAL NOTE
By implementing the concept discussed in this article, Conceptos Personalizados does not inherit responsibility for loans being paid, legal issues, or anything that results from the use of this information.
The legal notice is essential. We offer a “90 Day Financing Plan” that is guaranteed. We take care of the details and the risk. There is no risk for the trader. This article is based on the idea. You can implement many things to ensure that loans are paid. This will be your responsibility. We will discuss them and let you know the pros and cons.
You will need a good file management system. If you’re running a business, this isn’t really a problem. I recommend that all paperwork be scanned into your system. This allows for quick recovery if there is a problem with the contract the customer signs.
Below is an example that does not collect finance charges from the customer. This would qualify your program as “Same as Cash Financing.” You are allowed to charge finance charges and application fees. This would create another source of income for your business, but you cannot advertise “Same as Cash Financing.”
The choice is up to you.
Example:
Yoshi walks into your store and wants to buy your product or service, but he doesn’t have the money and has bad credit, no credit, or just doesn’t want to take out a loan. The item costs $1000. Yoshi says that’s too much right now. He explains that he can offer you a “No Credit Check Financing Option.” He says “Great.” You and Yoshi agree on a payment schedule that will fit your budget. You agree that $200, every two weeks, would fit your budget.
Yoshi will then write five post-dated checks for $200 each. Five checks for $200 equal the sales price of $1,000. I know there is someone who says that it is legal. Yes. The law with post-dated checks is very vague.
The two main things that come into play are:
1. If the customer writes a post-dated check that he knows will not be valid on the later date. This is a form of fraud. The client is wrong.
2. You cash the check before the posting date. When you and the client agree on the payment schedule, you agree to cash the check on the dates established in the contract. You’re wrong. They can sue you for the fines incurred and many other things depending on your state.
It’s a good idea to keep post-dated checks within 90 days of the date of sale. This is safer for you and the client.
The check should be kept in a safe place (in a safe). This will ensure that they do not fall into the wrong hands.
Next, you will need to tidy up the file system. You’ll need a way to let you know when checks are due to be cashed. You can do this in two ways.
The first would be a basic folder arrangement. Create a folder for each week. Check the folders at the beginning of the week to find out which checks need to be cashed.
The second and probably preferred would be a basic program with Excel or some other spreadsheet program. This would require you to enter the information into your system, but would save time setting up the file. You’ll set up the spreadsheet to organize payments by date. Review the spreadsheet each day to see which checks need to be cashed.
Here are a couple of things to protect you against fraud and payment default.
The following options are at your discretion. You can use one of them or all of them. The more you implement, the more protection you have that the client will not default on the loan.
These first three are, in my opinion, essential.
1 Obtain a copy of the clients identification
2 Get a copy of your most recent pay stub. You can go one step further and verify employment. You can call the employer or you can fax the Human Resources Department. The easiest way is to call. They can’t give you much information over the phone, but they can tell you if the client works there and if there is anything that might affect their future employment.
3 Call the bank to verify that the account is current.
4 Verify checks. If you have a merchant account that can process checks, this can be simple. If you don’t have check check, you can call your provider and check the prices to set it up. If you don’t have check verification and don’t want to pay for the service, there are other options. They are not as reliable but they will work. Physically go to the bank where the check was written and cash it. If there are no funds, they will tell you or collect and charge the customer an overdraft fee. DO NOT DO THIS WITH POST DATED CHECKS. This should only be done with checks that are not post dated. You and the customer made an agreement that you would not cash the checks until the date of the checks.
5 Check the customer’s check writing history. This can be done a couple of different ways. Visit National Check Network.com (NCN). You can also do a Google or ASK.com search for “How to Verify a Customer’s Check Writing History.” These systems can vary in cost and quality. We use NCN. This option will let you know if they have any outstanding bounced checks, a history of bad check writing, or any past check fraud.
These are the basics and if you want to tweak it to better suit your business, great.
We have a customizable contract on our website available for download. The form is a PDF. If you don’t have a PDF editor, you can go to PrimoPDF.com and convert the file to a .DOC file. This contract is free of charge and we will not ask you to provide us with any information. This is a great tool that will save you some time. There is no need to design your own. This is the exact form we use.
We also offer “No Credit Check Financing” which eliminates risk and is very easy to use. We implement the above procedures and guarantee payment to the merchant. If the customer defaults, we will honor payment and take action to recover money owed. The fees involved are typically less than what it would cost if you set up check verification and check writing history verification. It is guaranteed to save you time.
Advertising
Advertise “No Credit Check Financing” everywhere. Here are some suggestions.
Get a sign/banner stating you have the program. We have a local company that will paint the letters. You can also ask your local sign maker for help. Window sconces, car sconces, car magnets, the list goes on and on.
Change the audio on hold to mention “No Credit Check Financing” and also the voicemail recordings. Be sure to mention the plan when you answer the phone.
Include the program in everything your company uses for advertising.
* Yellow Book Ads
* Business letters
* Brochures
* Website
* Tshirts
* Vehicles
* You should make it visible to as many people as possible.
Run a local radio commercial stating that you are now offering “No Credit Check Financing.” This is spectacular if you can afford the means.
I hope everyone reading this doesn’t find it a waste of time. If you can’t use the information in this article, please pass it on to someone who can. If you wish, you can download an exact copy of this article and contract here. We will not ask you for any information. I will write more articles in the near future. The article will be about the ways that small businesses can increase their sales with various techniques. Sign up for my newsletter if you’d like to receive an email when they’re released.