Customer financing solutions: how to offer finance to your customers

Customer financing solutions let your customers spread or delay the cost of buying from you, while your business still gets paid. The main options for UK businesses are buy now pay later, point of sale finance, in house payment plans, trade credit and business to business (B2B) buy now pay later. The right choice depends on whether you sell to consumers or other businesses, how much your customers spend and how long you can afford to wait for your money.

Offering finance can help you close bigger sales and win customers who would otherwise walk away at the price. But each option works differently when it comes to who pays you, when you get paid and who carries the risk if a customer doesn't pay. This guide covers the customer financing options available, how they compare, the Financial Conduct Authority (FCA) rules you need to know, and how to protect your cash flow when you give customers time to pay.

What are customer financing solutions?

Customer financing solutions are ways of letting a customer buy now and pay later, either in instalments or after a set period. Some are provided by a third party lender, which pays you upfront and collects repayments from your customer. Others are provided by your own business, which means you wait for the money and take on the risk of non payment yourself. That difference is the most important thing to understand before you choose. With a third party lender, you usually get paid quickly but may pay a fee on each sale. With your own payment plans or trade credit, there's no fee to a lender, but your cash is tied up until your customer pays.

Which customer financing solutions can you offer?

There are five main customer financing solutions available to UK businesses. The first three are mainly used when selling to consumers, while the last two are designed for selling to other businesses.

Buy now pay later

Buy now pay later (BNPL) lets customers split a purchase into a small number of payments, often interest free, through a provider that appears as a payment option at your checkout. The provider usually pays you the full amount, minus a merchant fee, and then collects the instalments from your customer. BNPL suits online and high street retailers selling lower and mid value items, where customers want to spread the cost over a few weeks or months. Since the provider usually takes on the risk of your customer not paying, you still get paid in full if the customer misses a payment.

Point of sale finance

Point of sale finance, sometimes called retail finance, is a loan from a specialist lender that a customer takes out to pay for a larger purchase over a longer period. Typical examples include furniture, home improvements, bikes, dental treatment and electrical goods. Your customer applies at the point of sale, the lender pays you, minus its fee, and the customer repays the lender in monthly instalments. Agreements can be interest free or interest bearing, and they usually run for longer than BNPL. This makes point of sale finance a good fit for high value purchases that customers would struggle to pay for in one go.

In house payment plans

An in house payment plan is an arrangement where your business lets customers pay in instalments directly to you, without a lender involved. Gyms, training providers, trades businesses and service companies can use them to make a larger upfront cost more manageable. You avoid lender fees and keep full control over who you offer plans to. The trade off is that you don't receive the full amount upfront, and if a customer stops paying, chasing the balance is down to you.

Trade credit

Trade credit is a way that businesses give each other time to pay. You deliver goods or services now and invoice your customer, who pays within agreed terms, such as 30 or 60 days. There's normally no interest unless the customer pays late. Many business customers expect payment terms, so offering trade credit can be essential to winning and keeping contracts. Because you're the one waiting to be paid, it can have a big effect on your cash flow.

B2B buy now pay later

B2B buy now pay later works like consumer BNPL but for business customers. A provider pays you upfront, minus a fee, and gives your business customer longer to pay, often 30, 60 or 90 days, or in instalments. It can suit wholesalers, distributors and online trade suppliers that want to offer payment terms without waiting for the money themselves. Some providers carry the full risk of your customer not paying, while others can reclaim the money from you if the customer defaults. This is known as recourse, so it's worth checking the terms closely before you sign up.

How do customer financing options compare?

Each option balances cost, cash flow and risk differently. The table below shows how they compare on the points that matter most to your business.

Fees vary a lot between providers and depend on your sector, your sales volume and the length of credit your customer gets. Always compare the total cost against the extra sales you expect financing to bring in.

What are the benefits of offering customer finance?

Offering finance can make it easier for customers to say yes, especially on larger purchases. When a customer can spread the cost, the question becomes whether they can afford the monthly payment rather than the full price. The main benefits of customer financing solutions are:

• Customers may be more likely to complete a purchase when they can spread the cost.

• Customers may spend more per order when they can pay over time.

• Offering payment options that competitors don't can help your business stand out.

• Payment terms can help you win business customers who expect to pay on invoice.

• Third party options mean you can offer finance without waiting for your money.

The benefits are greatest where your products or services carry a high upfront cost, or where customers in your sector already expect to pay over time.

What are the risks of offering customer finance?

The main risks of offering customer finance are the cost of fees, the effect on your cash flow and the chance that some customers won't pay. Which of these matters most depends on the option you choose.

With BNPL, point of sale finance and B2B BNPL, the biggest risk is cost. Provider fees usually come out of each financed sale, so they eat into your margin. If your margins are already tight, you'll need to work out whether the extra sales justify the fee.

With in house payment plans and trade credit, the biggest risk is cash flow. Your business has already paid for the stock, materials or staff time, but the money doesn't arrive until later. If several customers pay late at the same time, you can find yourself short of cash for wages, rent and suppliers, even if your business is profitable on paper.

Late payment is a serious issue for smaller firms. Research for the Department for Business and Trade and the Small Business Commissioner found that late payment forces around 14,000 UK businesses to close every year. Clear terms and a consistent chasing process make a real difference, and our guide to habits that help small businesses get paid faster covers the steps to take before an invoice is due.

Do you need FCA authorisation to offer customer finance?

Whether you need FCA authorisation to offer customer finance depends on the type of finance and who provides it. Lending to consumers is a regulated activity in the UK, but some common arrangements fall outside the rules. You'll usually need FCA authorisation if you introduce consumers to regulated finance, such as interest bearing point of sale finance. This activity is called credit broking. Many retailers apply for a limited permission, which is designed for businesses where offering finance is secondary to selling their own goods or services. You won't usually need authorisation for these arrangements:

• An interest free in house payment plan for goods or services you supply is generally exempt if it has no more than 12 payments, all due within 12 months, with no interest or other charges.

• Offering third party buy now pay later at your checkout doesn't need authorisation, since the broking of these agreements isn't regulated.

• Standard trade credit, where a business customer pays one invoice within agreed terms without interest, generally sits outside consumer credit rules.

The rules for third party BNPL changed recently. Since 15 July 2026, BNPL providers have been regulated by the FCA, which means they must check whether customers can afford to repay. Customers can also take complaints to the Financial Ombudsman Service and may be able to claim a refund under section 75 of the Consumer Credit Act. These protections don't apply to agreements taken out before 15 July 2026, or to BNPL offered directly by the business that supplied the goods or services. The rules have exceptions, and adding a fee, interest or extra payments to a plan can bring it into regulation. If you're unsure where your plan sits, check with a finance provider or a legal adviser before you launch it.

How do you choose the right customer financing solution?

The right customer financing solution depends on who your customers are, what they spend and how much your business can afford to wait for payment. Start by thinking about how your customers already prefer to pay, then match the option to your margins and cash position. These questions will help you narrow it down:

• If you sell to consumers online or in store, BNPL is usually the simplest option for lower value items.

• If your customers make one off purchases worth several hundred or several thousand pounds, point of sale finance lets them spread the cost over a longer period.

• If you want to avoid lender fees and know your customers well, an in house payment plan gives you more control.

• If you sell to other businesses, trade credit is often expected, and B2B BNPL can help you offer terms without the wait.

• If your margins are thin, compare provider fees carefully, since a fee on every sale can outweigh the extra revenue.

Many businesses use more than one option. A retailer might offer BNPL on smaller orders and point of sale finance on larger ones, while a wholesaler might give trusted customers trade credit and use B2B BNPL for new accounts.

How do you set up customer financing?

How you set up customer financing depends on whether you're using a third party provider or running it yourself. To offer third party finance, such as BNPL or point of sale finance:

1. Compare providers on their fees, approval rates, credit limits and how quickly they pay you.

2. Check whether you need FCA authorisation for credit broking and whether the provider can help you apply.

3. Integrate the provider with your checkout, website or point of sale system.

4. Train your staff to explain the finance clearly and fairly, without pressuring customers.

5. Show the finance option on product pages and at checkout, so customers know it's available.

To offer your own payment plans or trade credit:

1. Write clear terms that set out the payment dates, amounts and what happens if a payment is missed.

2. Check each customer's ability to pay before you agree terms or a credit limit.

3. Use Direct Debit or automatic card payments for instalments, so payments are collected on time.

4. Set up reminders in your accounting software and follow the same process for chasing overdue invoices with every customer.

5. Review your terms and credit limits regularly as your customers' circumstances change.

How do you reduce the risk of offering trade credit?

The best way to reduce the risk of offering trade credit is to check a customer can pay before you agree terms, then keep monitoring them while they owe you money. A customer that paid on time last year may not be in the same position today.

A company credit check shows a business customer's credit score, payment history, any county court judgments (CCJs) and a suggested credit limit. If their score is low or falling, you can ask for a deposit, offer shorter terms or set a lower limit rather than turning the customer away. It also helps to:

• Set a credit limit for each customer, based on their credit check and how long they've traded with you.

• State your payment terms on every quote, order confirmation and invoice.

• Remind customers that you can charge statutory interest and a fixed fee on late business payments.

• Pause new orders for customers who are significantly behind on payment.

Fund the payment terms you give customers with invoice finance

Offering trade credit helps you win and keep business customers, but it means waiting 30, 60 or even 90 days to be paid. Invoice finance releases up to 90% of an invoice's value in as little as 48 hours, so you can give customers the terms they expect without tying up your own cash. You receive the rest, minus fees, once your customer pays. Capitalise works with a panel of 130+ lenders, including specialist invoice finance providers, so you can compare options that suit your turnover and the payment terms you offer. Apply for invoice finance with Capitalise today and keep cash flowing while your customers take time to pay.