Consumer spending is on the rise thanks in part to Americans having access to more disposable income. Americans’ overall financial well-being in 2016 continued on a modest upward path, according to the U.S. Federal Reserve Board’s latest “Report on the Economic Well-Being of U.S. Households.”

The October 2016 report, based on the board’s fourth annual “Survey of Household Economics and Decisionmaking,” revealed that 70 percent of respondents said they were either living comfortably or doing OK, up 1 percent from 2015 and 8 percent from the first survey results in 2013.

In addition, TransUnion reported credit card balances increased 7.4 percent to $693 billion, and personal lending balances increased 9.7 percent to $102 billion from the previous year in its first quarter “2017 Industry Insights Report.”

Contracting companies can capitalize on these consumer spending trends by offering financing for customers. Many HVAC contracting service and software companies are finding ways to streamline the financing process for contracting businesses.


ServiceTitan, a provider of business management software for HVAC, plumbing, and electrical residential contractors, recently announced integration with the GreenSky® program to provide ServiceTitan customers a fast, easy, and modern way to offer financing for home improvement jobs. With the new integration, technicians can show financing options and allow homeowners to submit an application all within ServiceTitan’s Mobile 2.0 app.

“Consumer financing is important to HVAC contracting businesses as it helps them close more sales and increase their average sale,” said Ershad Jamil, senior director of platform, ServiceTitan. “Most customers easily see the benefits of a newer, more energy-efficient system that keeps them comfortable. The challenge is that homeowners often don’t have several thousand dollars on hand to pay for new systems, so they have to ‘think about it.’ ServiceTitan’s partnership with GreenSky helps strengthen the home service business owner’s top and bottom line by offering homeowners financing options and terms right on the spot, so they can make a decision that day. This empowers customers to more easily purchase costly systems.”

With the GreenSky integration, technicians can close a sale without leaving the ServiceTitan mobile app, Jamil noted.

“The purchase process can sometimes be overwhelming and time consuming for homeowners,” he said. “GreenSky can provide instant feedback on its financing options that help customers make the best decisions for them. It also saves time in the process, which customers greatly appreciate. Once approved, jobs can be completed, invoices can be issued, and a smooth transaction can be completed. Finally, GreenSky provides instant credit decisions for customers, which allows them to purchase the products they want.

“Due to worries about money, homeowners often feel like they have to compromise on the size or quality of their system, and they don’t purchase what they really want or need,” he continued. “Our financing options remove that roadblock. When customers can buy what they want, tickets go up.”

Ryan Williams, general manager of 128 Plumbing, Heating, Cooling & Electric in Wakefield, Massachusetts, said his company has really benefited from ServiceTitan’s partnership with GreenSky.

“Having GreenSky integrated with ServiceTitan has given us the freedom to offer financing options to homeowners, which gives them the ability to make the right choices without price being the only factor,” Williams said. “We understand that customers can’t anticipate extensive plumbing work or a broken furnace in the middle of the winter. We’ve partnered with GreenSky and ServiceTitan because the program’s built for contractors. They took what was a bulky process and turned it into a paperless, 60-second approval step, all completed in the home, on-site. By being available via mobile app, it’s given contractors a faster cash flow process and customers attractive plans to choose from.”


According to Steve Moon, owner, Moon Air Inc., Elkton, Maryland, it’s extremely important for HVAC businesses to offer financing for customers. In fact, about 80 percent of Moon Air customers take advantage of the financing options offered by the contracting company.

“No one has a savings account for new HVAC systems,” he said. “Most people live paycheck to paycheck. When replacement becomes necessary, making the process easy for them results in sales for us and less headaches for them.”

Moon Air partners with several financial institutions, including Wells Fargo, Synchrony Financial, American General, and Service Finance Co., just to name a few.

“We have multiple finance partners,” Moon said. “This way, we can suit the client’s needs. Not every company accepts the same credit scores. Most applications are done at the table with immediate approvals.”

Offering multiple financing options is beneficial because most customers don’t want to shop for financing, Moon noted.

“If you have a reasonable rate, you win,” he said.

About 50-70 percent of Portland, Oregon-based Sky Heating & Air Conditioning’s customers utilize financing, according to Travis Smith, president of the company.

“It is an absolute must to offer financing as an HVAC contractor, and not just 28.99 percent credit-card-rate financing but something better,” Smith said. “How many people would buy a car if there was no financing available or the rate was 28.99 percent? How many people wouldn’t buy a house? HVAC can be the price of a cheap new car or average used car, so financing is a must.

“It also increases our sales,” he continued. “A recent example for us was a customer with $7,200 in the bank for a new HVAC system, which would only get a basic heat pump. We showed the customer a 60-month, 0 percent interest finance offer for a $14,000 system that was an inverter-driven heat pump and variable-speed air handler with a Wi-Fi thermostat. The customer was able to keep his $7,200 in the bank for emergencies and get the system he wanted. It was a better sale for us as a contractor and a better system for him.”

Sky Heating & Air Conditioning partners with Wells Fargo to offer financing for its customers.

“Wells Fargo has some great programs with Trane for zero percent interest,” Smith said. “We have also partnered with a local bank for customers who want longer financing terms. We get a lot of customers who call specifically for the financing. They get scared to call other contractors, because they think other contractors will look down on them if they can’t pay cash for the new system. But the fact of the matter is, at least 70 percent of people finance their HVAC systems in some way, so why not have them finance through you?”

Many people think in terms of monthly expenses, so it’s important for contracting businesses to have finance options available, noted Butch Welsch, owner, Welsch Heating & Cooling, St. Louis.

“Customers are more concerned about the monthly cost than the overall cost,” Welsch said. “Offering financing provides us another tool to help take care of our customers. From our standpoint, there is no doubt that a customer who is financing the installation is much more likely to upgrade the equipment involved in the installation because it often only increases the payment a few dollars a month as opposed to them having to come up with another $1,000-$2,000 if they are paying cash.”

Welsch also noted that his company does not currently have a large percentage of customers using consumer financing.

“This is due to the market area that we have always served,” he explained. “However, we have an aging population of customers, and as we work to replace them with newer and necessarily younger customers, financing has to be an important part of our sales approach.

Welsch also uses Synchrony Financial as its financial partner.

“We can install any brand of equipment, and the salesman can take the credit information on his iPad and have a response back within a few minutes regarding whether or not the customer has been accepted,” Welsch said. “There is not near as much paperwork involved as there used to be. The reduced amount of paperwork and the quick response time are the reasons we like Synchrony’s system.”


Knowing when to bring up financing options during a sales pitch is also key.

“Timing is important,” Moon said. “When you bring it up really depends on the sales system you are using. We get it done early.”

Smith said his employees bring up financing everywhere.

“We want customers to know it’s what most people do,” he said. “Customers should not feel shy about their purchase. It’s on our flyers, TV ads, and we mention it twice during the time we set the sales appointment. We also send an email about it and show it on every proposal.”

According to Welsch, his employees walk a fine line and try to be casual with customers during a sales pitch.

“Our salesmen typically will be quite casual in their discussion with customers regarding financing,” he said. “We have found in the past that some customers can actually be insulted that we would ask if they want/need financing. The implication being that we feel that they can’t afford to pay cash. They will typically ask as they begin to prepare the quote: ‘Do you feel you would be interested in financing this installation?’ By the customer’s reaction to the question, they know how to proceed.”


Offering consumer financing occasionally comes with its own complications, like if a customer is denied during the application process. The denial could potentially put the salesperson in a slightly awkward situation.

“If a customer is denied, we get creative,” Moon said. “We have companies that only do second-look financing. The rates are higher, but we can get them done. We even have local companies that will do collateral loans. Overall, it can be a pain in the butt getting started and managing the programs. In our experience, there is no risk unless you sign that you will pay the loan if the client doesn’t. Never ever do that.”

Smith said his salespeople proceed with honesty and integrity if a customer is denied financing.

“We mention other solutions for them, like talking to their own personal bank. We’ll bring up using a credit card, or we’ll show them lower cost options or possible repairs as well as explain that a repair is not a guarantee of future performance or breakdowns.”

There are risks involved if a contractor doesn’t understand the cost of offering financing, Smith added.

“Most companies will charge you a finance fee ranging from 1-15 percent of the cost of the job,” he said. “Even if you accept credit cards, you are paying a financing fee. You need to know how to properly account for this and build this into your pricing. If you are in business, you already know how to factor in your labor, materials, equipment, and permits. Financing fees are just another cost of goods sold.

“I have seen staggering statistics that more than 50 percent of Americans have less than $1,000 in the bank for an emergency, so what is the chance that homeowners who have 20-year-old broken R-22 systems with leaks and possible bad compressors have enough money to pay for the repair or the new system during the middle of summer?” Smith continued. “Offering financing helps customers take care of their needs since they probably have not bought HVAC systems before and have no idea what it may cost. Financing allows customers to be comfortable and for you to make the sale.”

The only downside to financing Welsch sees is the potential negative implication that a customer can’t afford to pay cash.

“The difficult thing for our company is that for so long, our customers have just written us a check or put their installation on a credit card that it is difficult to get the sales people to utilize the financing to help pick up additional sales,” Welsch said. “We tend to work in the more affluent areas of town, and, actually, now we are finding a large number of customers who previously might have written a check are putting the amount on their credit cards because they want to accumulate air travel miles. I believe it will be several years before we get the point that a very high percentage of our installations are financed. Again, as our market changes, we have to be flexible enough to provide things like financing, which are desired by our new customers.”   

Publication date: 9/11/2017

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