Why & How to Offer Customer Financing as an HVAC Contractor

How Does HVAC Financing Work?

HVAC financing is when a customer pays for a new HVAC unit through a personal loan. You offer customers financing so they can buy HVAC units when they don’t have the money to pay upfront. The most common way customers pay the loan is in regular monthly payments.

Many HVAC contractors offer financing options to their customers because their businesses can benefit from it. We will see how later in the article.

Luckily, technology has made HVAC customer financing hassle-free for HVAC service companies.

Commercial HVAC Financing

Providing customers with flexible ways to pay for HVAC services is beneficial whether those customers are residential or commercial. However, commercial HVAC contractors can see the highest benefits, as commercial HVAC systems are more expensive and complex, making financing far more attractive to customers.

Commercial HVAC financing is mostly used to fund larger projects that require a more significant investment. Companies may use commercial financing to purchase, install, or upgrade large-scale HVAC systems, such as rooftop units, chillers, or boilers.

Although it is highly beneficial for contractors and customers, HVAC financing comes with challenges that we'll discuss below.

Key Customer-Financing Challenges HVAC Contractors Face

If HVAC financing were easy, every HVAC business would do it.

The pain points associated with customer financing can keep many HVAC contractors from providing flexible payment options for their clients. Still, as we'll see below, the right software solution can address these challenges. 

Challenge #1: Providing a smooth process

Financing requests can take ages to complete as the process involves a lot of paperwork and back-and-forth that may tire the customer and waste time on both ends. Going through this process smoothly is challenging for most contractors, but software like ServiceTitan can help speed things up. 

ServiceTitan's Customer Financing feature allows customers to sign up for fast financing in ServiceTitan Mobile and receive an instant response. This is highly convenient for customers and HVAC contractors alike, as they can close more deals faster and more efficiently, thus increasing sales.

Challenge #2: Having control over rules and financing plans

Besides involving a lot of paperwork, most customer financing processes are also limited in what they can offer clients. As each customer has their own specific needs, HVAC contractors must be able to create financing plans that work for those particular needs.

With ServiceTitan, financing rules and plans have a lot of flexibility. HVAC contractors can easily customize and tailor financing rules and adjust spend thresholds, business units, or ticket sizes to create financing plans that meet their customers' needs.

Challenge #3: Finding a trusted provider

Another customer financing challenge many HVAC contractors face is finding a trusted provider. They have to ensure that the company they are working with is reliable and has a good reputation in the industry. They also have to do a lot of research, which takes time and might require more time to prove successful.

ServiceTitan's Customer Financing feature helps HVAC contractors overcome these pain points by connecting them with reliable, industry-leading partners such as GreenSky, Service Finance, or Financeit. Working with a trusted provider means less time spent on research and paperwork and more revenue for HVAC contractors.

Adam Cronenberg, Chief Operating Officer at A1 Garage Door Service, reveals the company increased revenue by 48% with integrated financing:

"The ability to offer financing through ServiceTitan is huge for our customers. A lot of times we are in the repair business; customers aren't planning for these bills."

As we've already seen, HVAC customer financing is both rewarding and challenging. Next are some steps on how to provide high-quality financing to HVAC customers.

How Can I Offer Financing to My Customers?

Offering customer financing is relatively simple, but you need the right tools and knowledge to make it successful. Here are some steps you can take to provide customer financing that makes the difference.

Step #1: Decide what type of financing you want to offer

Depending on your business needs, you can choose between two types of customer financing: in-house and third-party. 

• In-house financing: This type of financing means you offer credit terms directly to customers. This can be through installment loans or deferred payments, and it's often seen as a great way to increase sales by providing more flexible payment options for customers. However, offering in-house financing requires a lot of resources and expertise, as you're the one who needs to manage the entire process.

• Third-party financing: In this case, you partner with a third-party lender who handles the entire process on their end. This is often considered the easier way to offer customer financing, as lenders take care of all the paperwork and credit checks, leaving you free to focus on other aspects of your business. (If you opt for third-party financing, you must choose a provider, such as Klarna, Afterpay, etc.).

Luckily, technology has made HVAC customer financing hassle-free for HVAC service companies.

For example, ServiceTitan offers integrated customer financing with a partnered industry leader to offer customers tiered payment options for higher-ticket jobs.

How does this work?

For instance, an HVAC company chooses three monthly payment plans or reduced-rate APR plans to list as good-better-and-best options and three promotional plans, such as 12-month, 18-month, and 24-month same-as-cash, all with prices set to protect the company's margin.

When an HVAC business integrates its customized plans into ServiceTitan:

Customers choose whether to apply for financing, select their desired plan, enter their desired loan amount, complete a short application process, and instantly find their approval status. The ServiceTitan financial partner handles the loan particulars, including customer payments. 

HVAC financing programs through residential HVAC financing companies help your customers because they work like credit cards and home improvement loans, giving customers flexibility in when they pay back the total amount.

Step #2: Make applying for financing easy for your customers

Modern customers demand modern solutions that are simple, convenient, and fast. To make their customer financing offering successful, HVAC contractors must make the application process as straightforward as possible.

Contractors can incorporate financing across their sales channels to streamline checkout and keep all their HVAC sales data in one place. 

Easy finance applications also help you provide on-demand services at the right time. 

With ServiceTitan, techs can immediately present homeowners with financing options through ServiceTitan's mobile application to ensure every sales opportunity is captured. 

Also, ServiceTitan's financing feature provides automatic calculations that show "as-low-as" monthly payments to accurately inform customers and remove any roadblocks from the sales process.

Step #3: Let your customers know you offer financing

After you've taken the steps to make customer financing available, it's time to let your customers know that you provide it.

Mentioning your financing offers in ads or adding a link on your website to explain how HVAC financing works is an easy way to inform customers. HVAC technicians can also spread the word about your financing offerings when they interact with customers directly.

By following the steps outlined above, HVAC contractors can make customer financing an integral part of their business and provide it at the right time: when their customers need it.

What Are the Benefits of HVAC Financing for Contractors?

As mentioned before, HVAC customer financing benefits both customers and contractors. Let's look at some of the key benefits of HVAC financing for contractors.

Benefit #1: Grow HVAC sales in the field

Statistics prove that customer financing improves sales in the field, increasing revenue by more than 17%, according to results from ServiceTitan customer data.

So why doesn't every HVAC service company offer customer financing?

HVAC techs may feel uncomfortable bringing up the subject, assuming customers don't need or want payment options.

But ServiceTitan Mobile removes the difficulty of starting the discussion because the techs’ mobile tablet automatically displays customer financing options and HVAC financing rates to customers when they view the good-better-and-best options.

"It's showing them what their low monthly payment can be, if they're approved, and we're taking those hard conversations away," says Carly Armstrong, National Account Manager at ServiceTitan. "That's the first thing customers see, and they're going to ask the technician, 'Well, how do I get this $197 a month?' And that's an easy conversation."

No matter the result, it's a win-win situation for customers and HVAC companies.

"By giving them the option to choose, you're just opening the door for the customer to feel like they're in control of the sale," Armstrong says. "They have the option to choose what makes the most sense for them without having an intimidating conversation."

HVAC companies with financing can also increase leads by advertising their financing options online, especially when people search for "HVAC companies that finance near me."

Benefit #2: Expand average ticket sizes

Financing energizes your company's HVAC sales.

By strategizing HVAC consumer financing, you're equipping your techs to generate more on-site sales because all options become more affordable.

Just picture your tech showing a customer good, better, and best options on a tablet, with your company's "best" option just a few dollars more with a home HVAC financing plan and a better interest rate promotion.

"It's kind of like, 'Oh wow, if I go for the best option, then I can take advantage of that 48-month, zero-interest loan that I'm not going to get for going with the good option'," is how Armstrong describes a customer's reasoning.

Customers who apply for a $10,000 loan might see they're approved for $15,000. As a result, they may decide to choose an HVAC unit with greater energy efficiency or add on an air-quality product.

"This gives the customer the option to go, 'Oh, you know what? Maybe I do want to add on that Nest thermostat, that Bluetooth wireless thermostat. How much would my monthly payment be if I did that?'" Armstrong says. "The customer sells to themselves at that point."

Darius Lyvers, Chief Operating Officer at F.H. Furr Plumbing, Heating, Air Conditioning, and Electrical in Northern Virginia, trains techs to approach three types of buyers—low interest, no interest, or low payment. He uses custom rules to provide an option for each type in ServiceTitan.

“When you talk about integrated financing, it’s not just whether they finance or not,” Lyvers says. “It opens the door for the customer to afford all your products, and they may buy something they otherwise wouldn’t have if you hadn’t presented financing options."

 Benefit #3: Provide seamless customer experiences

Contractors who offer new HVAC financing or HVAC repair financing provide immediate solutions for customers from start to finish.

Whether customers don't know how much a cooling system costs, or want to avoid paying for it all upfront, financing for HVAC replacement gives customers the flexibility they need.

"When they get that invoice for $8,500 to replace their HVAC system, it's like, 'How am I going to afford this?'" Armstrong says. "People have no idea how much it costs. It's so important that they have other options than their credit card or digging into their savings."

Financing helps because it gives the customer more flexibility, says Mike Barnhart, Chief Financial Officer at The Eco Plumbers in Columbus, Ohio. "You don’t have to come up with all this money today or tomorrow, or even a year from now, given the different flexibility on different plans these days," he says.

Integrated customer financing makes a difficult situation easier for the customer. ServiceTitan speeds up the application process by automatically filling in customer information.

Depending on the financing partner, borrowers with a less-than-stellar credit score or credit history may obtain a loan from HVAC financing companies without waiting several business days.

GreenSky and Service Finance offer unsecured installment loans, which means customers can submit the total household income without digging up tax forms or homeownership paperwork for credit approval. Once customers enter information in just a few fields, they find out within seconds if they're approved for the loan.

"You're providing a solution for that customer to get their problem solved instantly and provide them with options to choose how they're going to be able to pay for it, which will create a long-term relationship with that customer," Armstrong says. "It's good business practice. You're helping a customer in need."

When your HVAC company provides superior customer experiences and offers HVAC financing that matches (or surpasses) your competition, your customers will be more likely to give top reviews and word-of-mouth referrals, increasing your HVAC leads and expanding your customer base.

Benefit #4: Streamline invoices and payments

Simplify your company's invoicing and payment processes by keeping all your data in one place, on one platform.

Train your team on HVAC invoicing software, which makes it easy for techs to convert estimates to invoices and immediately send them to customers.

It also lightens work in the back office by increasing billing efficiency and ensuring faster payments.

Techs can securely capture credit cards or checks in the field, or customers can receive a link to a personalized online payment portal. If a customer opts for an add-on or decides to sign up for an HVAC maintenance contract, your entire team has access to the information it needs.

"We want to provide our contractors in the trades with an all-in-one platform that is going to be a solution for you and your business," Armstrong says.

Benefit #5: Increase company revenue

When HVAC sales grow in the field, your company's bottom line also increases. Track the numbers to see where your company stands and where you need to focus.

With ServiceTitan's reporting software, you can instantly see which HVAC financing plans customers choose and the percentage of financed jobs down to each technician.

Those in the industry who have seen service businesses succeed repeatedly emphasize the value of customer financing.

"I've seen businesses take off; I've had sales reps call me two years down the road to say, 'Hey, because you taught me this little trick, I now have turned my 33% close rate into 79%'," Armstrong says. "The companies good at offering payment options to their customers are extremely successful businesses today."

Now Over to You

With the tips and tools in this article, you're more than equipped to reap the full benefits of HVAC customer financing and stand out from competitors. 

As mentioned before, ServiceTitan is a trusted partner for HVAC financing. With ServiceTitan, you can easily manage customer financing from a centralized platform, get detailed insights from loan data, and offer customers flexible payment options that guarantee customer satisfaction.

ServiceTitan is a comprehensive software solution that helps HVAC contractors streamline their everyday operations, provide outstanding customer service, and grow their businesses. ServiceTitan is trusted by the world's top contractors and provides powerful tools that make it easier for them to excel at their business.