Why the Business Could Be Called ‘Buy Here, Pay There’

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 www.bhphinfo.com.



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