Jon Vanstone, Chair of Certass, discusses the key issues for installers around offering finance, and explains the steps Certass has taken to ensure its membership has easy access to the right finance options.
Having a finance option to offer to homeowners looking for new windows and doors can be an integral sales benefit for local installers, often enabling them to compete with larger national companies. This is why Certass is ensuring that there is an easily accessible solution for installers in our industry.
There is a buoyant market out there for home improvements at present. With so many of us having been stuck at home for months, you start to notice what work needs doing around the house. Some have found themselves working from home for the first time, and for many it could become permanent. This is driving the increased interest in conservatories, extensions and garden buildings to create that all-important home office space.
This offers considerable opportunities for installers but prioritising the cost of a new conservatory or a full house of windows and doors can be difficult, and no matter how many holidays have been missed in 2020, homeowners won’t always have the cash to stump up front for a job. Add in new trends such as higher value and ‘lifestyle’ products such as wide-span doors, and that cash number steadily increases.
Larger order values can be profitable for SMEs, but increased order values often come with a greater demand from homeowners for flexible payment options. As we have come to understand, being able to offer finance to your customers can prove difficult to achieve currently in our sector with some very high sign-up rates in excess of £500.
Red tape and extra admin are often the barriers, and for some finance products, companies have to be authorised by the FCA as a credit broker – a process that can easily take up to four months.
We know from talking with our membership that there is an appetite for easy finance options. Installers want the choice of putting a finance option onto an invoice, without having a mountain of paperwork to fill in, or a long wait for authorisation.
The scope of home improvement finance is generally between £500 and £50,000. It covers supply only and supply plus installation transactions. A loan obtained through a home improvement retailer is known as Point of Sale (POS) finance or Retail Finance. Customers never actually receive the money from these loans. They are paid directly to the retailer within a few days of satisfactory delivery or installation of the job.
To offer this finance, SMEs with a revenue of less than £3 million will need to go through a broker.
If installers want to offer 0% finance, repaid in 12 instalments or fewer, the company does not need to be authorised by the FCA.
If installers want to deliver finance differently, the easiest way to do it is to become an ‘introducer’ of the broker. This means that you don’t actively sell or provide the finance to the customer, and don’t need to be authorised by the FCA. Simply use the broker’s IT system where they will advertise and present finance options to consumers. This method helps installers to offer finance without the admin and hassle of becoming an authorised credit broker.
If you’re considering ‘introducer’ options, always ask for a demo of the broker’s IT system and customer journey before signing up and be aware of any large upfront or monthly management fees.
This is why Certass is partnering with the leading home improvement finance providers and authorised credit brokers to help our membership get easy and fast access to finance for their customers. It follows our philosophy of helping the installer and not gaining from them commercially.
The finance industry is starting to offer some very attractive solutions to our industry and when combined with the need to renovate homes due to change in lifestyle requirements, an ability to ensure affordability for consumers without considerable cost and red tape for an installer will ensure continued revenues throughout the year.