Terms, What Terms? Or, Should Your Repair Shop Offer Financing?

We’re kicking off a new year — and for many shop owners, that means it’s time to revisit how 2024 treated them and figure out what they’d do differently for 2025.

(We’ve got a whole article on financial planning if that’s what you’re into.)

Anyway, the introspection of the season — along with, you know, the general state of the economy — made us look back on some of the conversations we saw amongst shop owners on Whova, the Diesel Connect ‘24 social platform. One owner asked who in the group had provided financing for customers. A bunch of his peers jumped in.

Voila, we have a topic.

So…what is financing? Is it something you should look into? What are the risks?

Before anything else, we should probably say that financing (and offering any kind of terms) is a personal decision; as a shop owner, you’re going to have to make the right decision for your situation. Your ability to finance as a one-man band cruising around in a repair rig will likely be very different from someone who’s got six brick-and-mortar locations.

So check out our advice, do your own research, and make some good decisions.

Now, let us proceed.

WHAT IS FINANCING?

In the words of some business owners, financing is basically “eating it.” You might even hear it referred to as the “Eater of Cash Flow” and “Devourer of Savings.”

Yes, that is a gloomy way to look at it, but here’s why so many have that mindset: when you offer financing for, say, some maintenance and repairs on a customer’s Peterbilt, you are basically extending them credit. You are funding the maintenance and repair.

But Fullbay, you might be saying, I’m doing the maintenance and repair…why would I be funding it?

Because stuff is expensive, bruh.

Let us be clear: you aren’t just letting your customer cruise out of the garage with your hard work. Financing usually involves plenty of paperwork and terms suitable to you both. These terms can include payment (or partial payment) within a set amount of days (30, 60, and 90 are popular), as well as added interest (sometimes, not always). In short, the customer doesn’t have to pay now, but they do have to pay, and in full (and sometimes a little more for the privilege of using financing).

Financing in itself is not necessarily a bad thing. You’ve probably seen a lot of major retailers like Amazon, Best Buy, and the like offering it on big ticket items. It can make a lot of stuff more accessible.

Lots of shop owners provide financing as a courtesy, by the way. We are currently parsing the data for the 2025 State of Heavy-Duty Repair, and almost 70% of respondents offer terms — specifically “Pay within 30 days.” From there, it’s a steep drop to 60 or 90 days (around 5% from what we can see so far), and then we have a little less than 15% of shops offering no terms at all.

So it’s a popular thing to do.

The issues start when customers don’t pay on time. Or like…at all.

Then your good-natured effort at financing has produced that most horrifying beast none of us want to deal with — the creature of darkness, the ruiner of lives, the Eater of Cash Flow.

CONFRONTING THE SPECTRE OF UNPAID BILLS

The problem with financing is it allows a customer to kick the payment can down the road — and once they’ve left the premises, you’re just sort of…forced to trust they will, eventually, pay up.

Except sometimes they don’t.

(Sometimes they can’t, sometimes they won’t. We’re not going into the how or why of customer troubles in this article — the point is you provided a service and they are not paying.)

“Carrying customers for 30 days is really hurting cash flow,” one owner said on the Whova board.

“I have some on 90-day billing cycles … which turns it into more like 120 days,” another added.

So you have multiple customers who are just not paying up on time. Those repairs weren’t free for you, by the way. You had to pay for the parts. You had to pay your tech (or yourself) for the work they did. You probably have a rent or lease, and insurance, shop supplies, and a host of other bills that need to be paid.

Except your customers aren’t paying, which means you have no cash flow, which means…you aren’t paying your own bills.

Oh. Crap.

So you start calling them and trying to track down those accounts receivable to prod them into paying. Sometimes they do, sometimes they don’t…but you’re trapped on the phone instead of, y’know, getting actual work done and building your business.

Suddenly you’re in a world of hurt. How do you get out of it? Do you send collections after them? Do you take them to court? That sounds even more expensive (and exhausting).

FINANCING THROUGH THIRD-PARTY SERVICES

If the above sounds a little too much like your everyday life, then step one is easy: stop extending credit yourself. You’re just bleeding money. Want an immediate fix? Start requiring payment upfront (Fullbay Payments makes this easy, BTW). You may still have to chase after customers who have let their bills slide, but you won’t be giving others that opportunity.

What if you still want to offer financing? It’s not inherently a bad thing, despite the problems that can accompany it; there are plenty of customers who do pay their bills within 30 or 60 days, for example. And yeah, we all get it — stuff is expensive. Is there a way to split the difference, and offer financing without risking your shop’s financial well-being?

Sure. Look into offering financing through a third-party platform. We’ll plug our friends over at Interstate Billing Services for this; basically, when you bring them into the loop, they pay you upfront, and the customer pays them. They also handle any follow-up necessary (like chasing down accounts receivable; if you’re interested, we’ve got a rundown of how they can make life easier for you). And yes, we work with IBS and even have an integration with them, so we’re talking about them, but there are other platforms that work similarly.

The primary risk with any third party is that your customers will balk at it, as they will need to set up an account with almost any company you partner with. There was a lot of chatter about that issue on Whova; many customers already don’t like $3.75 fuel charges or seeing a charge for shop supplies on their invoice (“Why should I pay for that? They’re your supplies!”).

EVERYONE’S SOLUTION WILL LOOK DIFFERENT

As we mentioned earlier, your ultimate fix will be up to you. Maybe you:

• Offer financing only to repeat customers — new customers must pay in full, upfront;
• Provide financing with firm terms (i.e. 30 or 60 days);
• Have an accounts receivable person available to chase down those who haven’t paid up on time;
• Contract with a third-party platform so they offer financing, not you;
• Allow customers to pay in coffee and donuts…we’re joking…mostly.

If you do decide to provide financing of some sort on your own, you’ll be doing yourself a favor to bring on a dedicated accounts receivable person to do any required chasing. Really — you don’t want to be pulling techs and service managers away from their actual work. Maybe this is a part-time person, maybe they’re a trusted contractor you engage when necessary. Who knows?

Financing can be a good thing for both your shop and your customers if you go about it the right way. Whatever way you choose to offer it (if you offer it at all), we wish you much luck and happy repairing in 2025.