5 Reasons Machine Shops Should Extend Credit
Are you making it as easy as possible for customers to spend money with you?
The more ways you can give customers to pay their bills -- and do it on time -- the better for your business. Here are five reasons your shop should extend credit and offer multiple payment options.
Customers Expect Options
Blame Amazon if you must, but your commercial customers want the same payment choices they get as consumers, and the shops that give them those options are going to win the business. This doesn’t have to be burdensome for you -- many software solutions make it fast and easy to add these functions.
Timing is Everything
It would be great if the world operated on a COD basis, but most purchasers want 30 to 60 days to pay -- especially on large orders. Extending credit to qualified customers allows you to capture business from shop owners who don’t, increase average order size and ultimately increase revenues. Instead of relying on manual credit decision-making, consider an accounts payable solution that automates the process so it’s faster and more accurate.
Customers Don’t Want Hassles
You may have heard the term “frictionless commerce” and thought it doesn’t apply to manufacturing and machining businesses. But the truth is, nobody -- regardless of what they’re buying -- wants to navigate a clunky or time-consuming payment system. When you remove speed bumps and other problems, you make it easy for people to buy from you and reduce the need for sales and office staff to spend time with frustrated customers. Talk about a win-win!
Your Approach to Payments Influences Reputation
It’s not fair, but we tend to think that a business offering terms is on a stronger financial footing than one that isn’t. And if we have one unsatisfactory experience with a company, we’re likely to tell a lot of people about it. That’s another reason it’s a smart move to make credit and electronic payment options work in your shop. It can improve your reputation in the marketplace, boost customer confidence and help you stand apart from competitors.
Happy Customers are Loyal Customers
When we keep our customers happy with high-quality products and service, they tend to stick around. Multiple studies by research firms and academic institutions show that even 5-percent growth in customer retention can drive profits up by at least 25%. That’s in part because satisfied purchasers tend to spend more with you and send new customers your way.
Setting your shop up to capitalize on these opportunities doesn’t require a huge investment in time or software.
