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5 Tips for Using Credit Wisely to Boost Holiday Sales Done prudently, helping customers to buy now and pay later is a sound strategy for maximizing sales.

By Steve Allocca Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Access to credit remains a challenge for the estimated 23 million small businesses in the U.S., especially during the holiday shopping season. How will they afford to stock their shelves or hire seasonal employees before the crowd of shoppers arrive?

On the flipside, as businesses clamor for credit to meet demand, consumers are also seeking out credit options to purchase gifts for their loved ones. The average person is expected to spend $804 on holiday gift-giving this year. Many of them will be looking for offerings like promo-period interest-free credit and payment plans. This puts businesses in a difficult position, as some may be unable to meet this increased consumer demand.

Fortunately, innovation in the credit lending space is making it possible for retailers to access new forms of credit that will empower them to face the biggest shopping season head-on. But this is not your father's credit. Given how quickly the landscape has evolved in just the past five-to-seven years. While there is a lot to be excited about, there are also a lot of potential challenges to navigate.

Related: Why Consumer Credit Matters to Small Businesses (Opinion)

Here are five ways businesses can take advantage of these new credit and revenue avenues to tackle the shopping influx head-on, increase sales and give online customers greater financial flexibility when shopping for the holidays:

1. Give credit where credit is due.

Providing shoppers with access to credit, inclusive of special financing offers like six months interest-free, at online checkout not only gives customers more purchasing power, but also drives sales and increases purchase value. A recent Forrester study found that offering this type of flexible credit payment option results in a 17 percent increase in incremental sales and 21 percent increase in average order value.

2. Fill that stocking now.

With an average online shopping cart abandonment rate of 68 percent, there is a lot of room for businesses to improve their conversions. In the online commerce environment, in-context credit for customers can make the difference between a filled stocking and an abandoned cart.

Related: How to Get People to Stop Ditching Their Online Shopping Cart

3. Have all hands, and merchandise, on deck.

Need to hire a few extra hands to help with the holiday hoopla? Have a particular product expected to fly off the shelves that you had better stock up on? A less conventional but quicker and more effective solution to securing capital is through alternative options from companies like PayPal, Fundbox and IndieGoGo, which provide products such as PayPal Working Capital, merchant cash advances, peer-to-peer loans and crowd-funding to help retailers fund seasonal staffing and manage cash flow for increased inventory.

For example, Jeff Caruso, owner of game maker Crisloid Products Inc., leveraged a $12,000 loan from PayPal so he could increase his inventory of custom backgammon sets and other games to meet the increased holiday demand. To date, the company has borrowed more than $35,000, taking advantage of the flexible terms and the fast loan distribution.

Related: Puncturing the 3 Newest Myths About Small Business Loans

4. Don't stall on installments.

By providing installment options, merchants can further meet the growing demand for credit by offering flexible payment options for online holiday shoppers. Since retailers know their customers best, leading solutions give retailers control over installment options for their shoppers, with a reduced number of fields required for securing credit and completing purchases.

5. If you've got it, flaunt it.

Simply having the latest credit options available to your customers is not enough. In order to get your full return on investment, seek out a partner that offers an advertising program to help promote your financing options through banner ads or other online marketing materials.

Retail sales are under close scrutiny this year, but having access to credit as a merchant and offering flexible credit to consumers can open up opportunities to buy and sell more, creating a positive economic impact this holiday season. Leading technology innovators have been working hard to create better credit products that are simple, transparent and flexible for both businesses and consumers.

Technology is finally driving smarter lending at scale and businesses effectively leveraging this credit innovation will give themselves a leg up in their markets to prepare for the shopping influx, increase sales and meet the growing demands of their customers this critical holiday shopping season.

Related: Boost Sales With Numerous Payment Options

Steve Allocca

VP and GM of Global Credit at PayPal

Steve Allocca is head of credit globally at PayPal, helping to drive credit close to PayPal’s brand. Credit at PayPal includes PayPal Credit, PayPal Working Capital, a MasterCard and private label credit portfolio offered through GE Capital, expanding PayPal credit globally, installment lending and business lending focused on our eBay, Inc. customers.


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