Customer financing is a third-party arrangement letting the customer pay over time while the business receives the full amount immediately.
What it changes
The constraint on large work is frequently what the customer can pay this month rather than what the job is worth to them.
Financing converts the question from a total into a monthly figure, which raises the size of work accepted — see increasing average job value — and raises close rate on larger proposals.
What it costs
A percentage of the financed amount, retained by the provider. Promotional terms offered to the customer generally cost the business more, since somebody funds the interest-free period.
That cost comes out of gross margin and belongs in the price rather than being absorbed after the fact.
The distinction from carrying it yourself
Third-party financing pays the business in full, and the customer's credit risk sits with the provider.
A payment plan offered directly by the business keeps that risk — it is lending, and it becomes bad debt if the customer stops paying. The two are frequently spoken of as the same thing and are not.
Regulation
Consumer credit is regulated. How options are presented, what must be disclosed, and who may arrange the credit are governed by law, and the provider's requirements exist for that reason. This is an area to implement to the provider's process rather than around it.
Where it fits
Alongside deposits rather than instead of them, and alongside ordinary payment processing for work small enough not to need it.