True retail finance involves the use of Debtor creditor Supplier agreements (definitions) and requires the retailer to have a consumer credit licence with category C coverage on it. This will enable you to act as a broker and process consumer credit agreements through your various trading channels IE Web, Shop or mail order.
When I talk about retail finance I am usually talking about Interest free credit (IFC) as used by many large furniture outlets like DFS or SCS. There is also the Buy Now Pay Later (BNPL) product largely used in lower margin sectors such as IT and consumer electronics IE Currys, PC World etc. This product is not to be confused with IFC though as there is a significant difference between the two offers plus it’s also illegal for BNPL to be presented as IFC. Lastly there is interest bearing or classic credit, where the customer pays a rate of interest determined by the retailer.
There are other offers that could also be considered retail finance. Store cards as offered by large department stores for example and even some co branded credit cards available through many large national retailers and online resellers like Play.com. True retail finance though in my mind is that which is offered by the likes of Barclays Partner finance, Hitachi or v12 Finance. Fixed term credit agreements that are specific to the purchase of goods and or services from a specific retailer.
To offer retail finance a retailer usually needs to meet certain criteria to be accepted by a lender as an introducer. The criteria will vary from one retail finance lender to another but generally they are consistent in that they will all consider the products you sell, your retail sales turnover and your time in business. It may be that your business doesn’t meet some or all of the criteria and therefore leaves you without a retail finance offering.
This is an issue faced by many businesses throughout the Uk and considering the recent history in the retail finance market where two previously key players pulled out and another went into administration it may not change much in the near future.
The options then are to look to brokers such as moneysolutionsuk to help your customers who need finance the most get assistance in sourcing a loan that can then be used to purchase from you. It is a process sometimes dressed up as retail finance but the truth is that it is simply an alternative to traditional retail finance for companies who can’t get a direct line into one of the 6 main lenders. It may also be treated as a supplement to traditional retail finance where we may offer to help customers declined by a retail finance lender but still needing credit in order to buy.
If you can a direct line arrangement in place with a retail finance company then this frankly is the best process for you being that you will get paid directly by the lender and have control over the rates on offer. You won’t though be able to control the acceptance rates of the lender and in this sense having a back up offer such as Moneysolutionsuk may be very useful for business.
But what if you can’t get a direct facility? Our process enables you to advertise our facilities and enables customers who perhaps have been turned down for a bank loan or credit card . For customers who don’t quite meet the sometimes rigid and restrictive criteria of the big banks we can help. We use a rate for risk model and will work on the customers behalf to get a loan offer from an extensive panel of unsecured and secured lenders so whether the customer wants £1000 to buy a sofa or £25,000 to extend his house and fit a new kitchen we can perhaps help.
We can offer guidance on what’s available in the market based on personal experience and an honest appraisal of what we may be able to do. If we think you can get a line into one of the traditional lenders we’ll tell you. We don’t charge prohibitive arrangement fees or management fees as for the typical SME clients we support it simply doesn’t warrant it. Why should you pay for something we don’t do?
So if you want to discuss your options or are looking for a cost effective alternative to retail finance then contact us today
