Change was afoot at Flattered AB.
The Stockholm-based company behind the popular direct-to-consumer contemporary shoe brand Flattered found success producing two collections a year featuring sustainable and stylish heels, loafers, boots and slippers for women.
But in 2019, Flattered needed to re-examine its trade relationship with its suppliers in Spain. In order for Flattered to secure specialty materials such as chrome-free leather and vegan alternatives that are key to the brand’s eco-friendly mission, the company was required to make upfront payments for all its supplies.
“We used to have to pay our suppliers 30% of the overall costs as soon as we placed an order with them,” says Gustav Lidén, CEO of Flattered. “As our business has expanded, and we have grown our order sizes with the factories, we now make a 100% payment only when the goods are shipped from Spain.”
But with long-lead production cycles that stretch over a year, Flattered faced an unsustainable gap between costs and income, which significantly impacted cash flow at the company. “Liquidity is one of the major bottlenecks that can constrain our ambitions to expand,” says Liden.
Unfortunately, credit was not an option. “With regards to securing credit on the payments, our suppliers have previously been requesting a Letter of Credit from our bank,” says Lidén. “For a company of our size, a Letter of Credit can be a complicated process with transaction fees that are too high for us.”
This is where we.trade steps in. As the world’s first enterprise-grade, blockchain-enabled trade finance platform, we.trade offers a safe and more reliable platform for buyers and sellers to trade globally using distributed ledger technology and smart contracts.
Through a joint venture between seven European banks, we.trade was established as an independent company based in Ireland in 2017. Today the company is owned by 12 banks, technology leader IBM, and global commercial credit and business information provider CRIF with shareholders from institutions such as CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Nordea, Rabobank, Santander, Societe Generale, UBS, and UniCredit. In 2019, the company brought we.trade technology to market under a SaaS model and has already onboarded 16 banks across 15 countries to join the platform.
Any company that is a customer of the European consortium of banks which supports the we.trade platform can sign up and begin trading. Flattered — who is a client of Nordea, the leading bank in the Nordic region and a founding member of we.trade — was one of the early adopters to recognize how they could reap the benefits of we.trade to solve their cash flow problems and grow their business.
“Paying upfront for purchase orders in November to make a spring collection of shoes takes lots of liquidity. This can either be paid directly by Flattered or with a bank overdraft facility,” says Urban Ljungblom who handles trade and working capital development at Nordea. “Now that Flattered is using we.trade, they can place an order and offer the counterparty also using we.trade a bank payment guarantee.”
“we.trade is a very good and effective way for us to connect with a financial instrument that is very well suited to the particular structure of our business,” says Liden. “As upfront payments are such a large part of our operating model, extending payment terms via we.trade with a bank payment guarantee is as convenient for me as a credit line.”