By Ken Shilson
Buy-here, pay-here was founded on the concept of customers paying directly at the dealership, intended to build a stronger “bond” between the customer and the dealer after the vehicle was sold and allowed the dealer an opportunity to physically inspect the collateral (the vehicle sold) periodically over the entire term of the contract. Hence, BHPH was rightfully named, “buy here, pay here” because the majority of repayments were made in person by the customer.
Today’s successful BHPH operator must provide multiple options for customers to make their contractual payments and eliminate the need for them to drive to their lot to pay in person.
Prudent operators must strive to become more efficient in collections without increasing their overhead. Further, operators must seek to have customer payments deposited as quickly as possible to their bank accounts and eliminate the need for personnel to process these customer repayments manually.
The use of electronic portals to accept payments improves internal control over cash receipts and increases cash flow. Operators who are not using electronic payment methods are missing an important competitive advantage.
When it comes to reviewing pay portal options consider whether that service provider meets certain industry regulations. Some providers today may not meet either! At our upcoming NABD Conference in Atlanta on Oct. 21 through 23, 2012, we will discuss these standards in detail and how to make sure your business is working with firms that meet and exceed them.
In addition to processing customer payments electronically, successful operators also offer other repayment options such as debit cards, ACH, “moneygrams,” credit cards, prepaid debit card issuance and other alternative payment methods.
These alternative repayment methods are a major improvement over the old “pay at the lot” procedure and will continue to be an integral part of good BHPH collection procedures in the future. The cost of the various repayment processing options should be evaluated against the benefits they provide to determine which alternative(s) best fit in a particular operator’s collection program.
In the challenging BHPH environment of today operators need to work smarter, rather than harder. The use of alternative payment processing methods to enhance collections and cash flow is highly recommended because “pay here” appears to be the past and “pay there” is the future.
Ken Shilson is founder of the National Alliance of Buy-Here Pay-Here Dealers. For more information or to register for upcoming events visit .