Deferred payment stores – what is it and how does it work?
Some stores allow their customers to make purchases without paying immediately. This usually works on the basis of trade credit – the parties agree on a date (although usually the stores have a predetermined maximum deferred payment period) within which the buyer agrees to pay for the order. Another option is to allow companies to buy on installments with external financing.
But does such an arrangement mean that the seller de facto agrees to remain unpaid for 30, 60 or even more days? Not at all – behind deferred payment is often a partnership relationship between the store and the factoring company.
EXAMPLE
TIM’s online electrical engineering store allows its customers to purchase by installments with deferred payment thanks to an agreement with PragmaGO. Entrepreneurs sourcing from this store can take advantage of deferred payment and pay in installments, within 1, 3, 6, 9 or 12 months, and fill out an application in just a few minutes – all done online, of course.
What if the store does not offer deferred payment purchases?
Not every store provides this option – this happens for various reasons, but the result is one: you need to look for another financing option. Of course, you should also consider finding another store – one that has installments for business on offer, preferably on attractive terms. However, if you have been buying from the same place for a long time, have regular customer status, or can count on a discount, you are left with two options: an individual request for trade credit or an installment purchase financed by an external company.
Trade credit not for everyone
Applying for trade credit is, in a sense, treading on shaky ground – first of all, trade credit involves risks that the seller has to take. So unless we’re talking about a long-term, secure business relationship between customer and vendor, this route seems unlikely. However, it is certainly worth considering, as trade credit is a low-cost solution.
Financing corporate purchases
Another option is to reach for external financing for company purchases. At the end of the day, if a store grants deferred payment, it uses an external company that de facto pays the order right away. Any entrepreneur can use such a service without the intermediary of a store. How does it work?
- Place your order at the store of your choice.
- Submit the ordered products for financing in PragmaGO – here.
- Fill out the form, and confirm the terms of the agreement with an SMS message.
- PragmaGO pays the order by express transfer.
- You can pay the amount due for the order in 30 days (on a deferred payment basis), or in convenient installments, the number of which you determine yourself when filling out the application.
You will complete all these steps online, without leaving home, signing piles of documents or visiting the bank.
Online shopping with deferred payment is a great way to maintain cash flow or to take on a lucrative assignment, the execution of which will provide stability for the company for a long time. The unquestionable advantage of such a solution is the short time that elapses from the moment of placing an order to the receipt of funds in the store’s account – the processing of an application in PragmaGO takes up to a few hours, and the money is sent by express transfer, so that your company can focus on doing business.
Let customers pay later
In many industries, deferred payment is a highly desirable mechanism, and sometimes its presence (or absence) has a significant impact on the purchase decision – an entrepreneur who is temporarily in a worse financial situation (for example, when waiting to recover frozen funds from a counterparty) will sooner look for a store that offers deferred payment than hold off on a purchase until the money is received.
Deferred payment is, of course, a mechanism with certain risks, so it is worth taking appropriate precautions. First of all, offering deferred payment (i.e. de facto trade credit) to customers can be done on our own (assuming the risk on the company) or, as we mentioned earlier, using a partner, such as PragmaGO. This form of cooperation was decided by sklepwarsztatowy.pl.
EXAMPLE
Sklepwarsztatowy.pl has partnered with PragmaGO, allowing the store’s business customers to order the goods they need without having to pay for the order immediately. Instead, they can take advantage of installments spread over a period of 3 to as many as 36 months, and the store will receive the amount due the same day! Details on the partner’s website: sklepwarsztatowy.pl.
If you run a store and are wondering whether offering deferred payment to customers is a good idea, consider its other features. More variety in payment methods is always a nod to customers, whose shopping preferences are, after all, diversified. Deferred payment also makes the offer more attractive in the eyes of those entrepreneurs who get used to one store and become regular customers. Finally, this is one way to increase turnover and improve the flow of money in your business.
