Order Financing

What is order financing?

Order financing, sometimes called inventory financing or bridging credit, is a type of corporate financing specifically designed to solve a temporary liquidity shortage. It occurs when a company needs to pay its suppliers for goods or materials before They have been paid by their end customers.

It is a financing solution that bridges the gap between spending and revenue.

For SMEs, this scenario is extremely common. A new customer places an unexpectedly large order. In order to deliver, you need to buy hundreds of thousands of dollars worth of goods. At the same time, your customer may want 60 or 90 days payment time. Your provider, on the other hand, may want payment within 10 days. This is where your order financing comes into play.

Cash flow slowing growth

For many small business owners, cash flow is king. You can have a profitable business on paper, but if the money is locked up in accounts receivable or inventory, it doesn't matter -- the bills still have to be paid.

The most common challenges we see are:

• Long payment terms: Your customers (especially larger companies) often require 30, 60 or even 90 days of credit.
• Short Vendor Credits: Your suppliers, especially those abroad, often require upfront payment or very short payment terms.
• Seasonal variations: You may have to build up a large inventory months before the high season (e.g. Christmas trading, Black Friday or the summer season) to meet demand.
• Large, individual orders: A sudden success in the form of a grand order can, ironically, create an immediate financial crisis if you don't have the capital to deal with it.
• Traditional banks: Turning to a traditional bank for a quick bridge loan is rarely an option. Processes are slow, collateral requirements are high, and they have historically failed to understand or prioritize the needs of small businesses.

This in aggregate creates a “cash flow gap” or “liquidity gap.” It is precisely this gap that Qred's order financing is designed to close -- quickly and smoothly.

Order Financing with Qred: A business loan with no commitment period

At Qred, we don't like complicated products or lock-in effects. We are rebels against the old banking system. Instead of a complicated product like “order financing”, we offer something much better: a flexible business loans that you can use just how you want, and which is perfectly adapted to finance your orders.

Our solution is built on simplicity, speed and transparency.

Here's how it works when you use Qred finance as your order funding:

1. You will receive a large order: A customer orders goods for SEK 500,000.
2. You will need capital: To produce or purchase the goods, you need to pay your supplier 300 000 SEK immediately.
3. You are applying at Qred: You can make a free digital application in minutes.
4. You get the money: After approval, you often have the money in the account on the same day.
5. You pay the provider: You use the money to pay your supplier and can begin delivery to your customer.
6. You get paid by the customer: 60 days later, your customer pays the invoice of SEK 500,000 to you.
7. You pay back Qred: You will immediately settle the entire loan with Qred.

Since we have no binding period, you only pay for the two months you actually used the money. You pay a fixed monthly fee, so you know exactly what your order financing cost. No hidden fees, no onerous interest, no penalties for paying you back early. We encourage it!

Benefits of Qred Order Financing

• Quickly: The whole process is digital. You can be notified within one hour and payment on the same day. You have time to accept the order and pay the supplier on time.
• Simple: An application, a clear price. You do not need to submit individual order confirmations or invoices.
• Smooth & Flexible: Our main advantage is the lack of bonding time. Traditional order financing or factoring can unlock you. With Qred, you pay back exactly when you get paid by your customer, whether it takes 30, 60 or 90 days.
• Transparent pricing: We are refreshingly honest with our costs. We have no upfront fees, no hidden fees and no complicated interest calculation. You pay a fixed monthly fee for your financing. That's all.

Who needs order financing?

Any business that handles physical goods and experiences a gap between supplier payments and customer revenue can benefit from order financing. This is especially common in specific industries that often have large stock-bound costs.

Order Financing for E-Commerce and Retail

For those who run e-commerce or physical stores, cash flow is directly linked to your warehouse.

• Inventory build-up: You have to buy into products and fill the shelves (physical or digital) long before you see a dime in revenue.
• Season peaks: Preparing for Black Friday, the Christmas trade or the summer sale requires huge capital investments months in advance.
• Container purchase: In order to get good purchase prices, you may buy an entire container from a supplier in Asia, which must be paid at the time of shipment.

With Qred financing, you can ensure that you have the most sought-after products in stock when demand is highest. It is a crucial factor in succeeding. Read more about how we help traders on our page about loans for stores and e-commerce.

Manufacturing Industry and Wholesalers

In manufacturing and wholesale, chains are often long.

• Raw Material: You need to buy raw materials, components and parts to even start production of an order.
• Production Time: It can take weeks or months to manufacture the finished product, all the while with money out for wages and materials, before you can bill.
• Large volumes: As a wholesaler, your business is based on volume. You buy large lots to resell, which ties up huge amounts of capital in your inventory.

Order financing gives you the muscle to manage production costs and source materials in the right volumes without having to pause operations while waiting for customer payments.

Perfect for seasonal variations

Few things are as challenging to liquidity as sharp seasonal fluctuations. Christmas shopping is a perfect example. To maximize your sales in November and December, you often need to place your purchase orders as early as August or September.

That means 3-4 months of increased spending before the revenue from sales comes in.

Using Qred's flexible loans as order financing for the season is a smart strategy:

1. August: Apply for funding from Qred and pay your vendors for the Christmas shopping.
2. September-November: You only pay the fixed monthly fee to Qred.
3. Desember: Sales are taking off and revenue is pouring in.
4. January: Once the customer payments are in, you will settle the entire loan with Qred.

You've only paid for the period you actually needed the capital, without being stuck in a long loan or having to worry about weak liquidity in the fall.

Difference Between Order Financing, Checking Credit and Factoring

There are several different types of financing, and it is easy to mix them up. All of them solve liquidity problems, but in different ways.

• Order Financing (via Qred): A flexible business loans which you take to cover a specific purchase (your order). You get the money, pay your provider, and then pay back the loan once your customer has paid you. You pay a fixed fee for the time you use the money.
• Factoring (Invoice Purchase): Med factoring or invoice borrowing do you sell your customer invoices to a finance company to get paid directly (minus a fee). That solves the problem after you have delivered. It won't help you pay for the order before you can produce it.
• Check Credit: A traditional banking product where you get a credit limit attached to your business account that you can tap into if necessary. It can be a good buffer, but is often linked to complex terms and conditions, collateral requirements and a traditional banking relationship. Qred's solution acts as a modern, digital check credit but with simpler and more transparent pricing.

The advantage of Qred business loans is the combination of speed and flexibility. It's easier than a check credit and solves the problem prior in the chain than factoring does.

What is the cost of order financing at Qred?

We believe in transparency. Instead of a hard-to-calculate interest rate, Qred has a fixed monthly fee.

This fee is the only cost of your financing. There are no start-up fees, fees or other hidden costs. When you receive an offer from us, you will clearly see what your monthly cost will be.

If you borrow SEK 100,000 to finance an order and your monthly fee is SEK 1,500, and you repay the entire loan after 2 months, then your entire order financing has cost you SEK 3,000.

It makes it extremely easy for you to count on the profitability of your order. You can easily set the cost of the financing against the margin of the order you just sold in.

How to apply for financing for your orders

We have made the process as quick and easy as possible, because we know that business opportunities do not wait.

1. Apply digitally in 1 minute: Fill out your application on our website. It is free and non-binding.
2. Personal offer: You usually get your offer within an hour. We don't just use rigid algorithms, but make a personal judgment.
3. Sign with BankID: Accept the offer digitally.
4. Payout: We pay out the money instantly, often you have it in the account on the same day.

You are now ready to pay your provider and secure your deal.

Why should you choose Qred for your order financing?

Qred Bank was founded in 2015 for a reason: we saw how small business owners were systematically ignored and ill-treated by the old big banks. We are the bank that has sat in your seat ourselves.

Since our inception, we have helped over 50,000 companies in seven countries grow. Our customers love us, as evidenced by our thousands of positive reviews on Trustpilot.

We offer:

• A world-class personal service.
• A completely digital and seamless process.
• No bonding time or start-up fees.
• A fixed monthly fee instead of tortuous interest.

Don't let a temporary liquidity shortage hinder your company's growth. Take control of your cash flow and say “yes” to the next big order.

Apply for your order financing today — it's free, takes a minute and you don't commit to anything.