How Finery Use Klarna’s Merchant Lending to Grow

UK fashion brand Finery wanted help financing their rapid growth. They got it through Klarna's Merchant lending service. "Klarna is a strong and credible partner," says the director John Hind.

Finery was started in 2014 in London with the concept of selling contemporary, high-quality womenswear at an affordable price point. The brand prides itself on working with some of the most experienced and innovative talents in British fashion. They sell their clothes online and through retailers to shoppers in the UK and a number of other markets. Klarna and Finery have a long history together.

“We’ve been working with Klarna since we started Finery five years ago. It was one of the first partners that we got on board, so we go a long way back together,” explains John Hind, Director and ex-CEO at Finery.

The brand gives its customers the possibility to buy now and pay later with Klarna, which has proven to be a successful move for their business in a number of ways.

“First of all, Klarna is a strong and credible partner in the most critical part of our online customer experience, i.e. the checkout and payment process. Klarna is also offering innovative and ongoing customer solutions like pay in instalments and try now pay later. Not to mention the robust and secure service, both for us and our customers,” John Hind says.

As we all know, growing fashion retailers need access to capital in order to fund upcoming collections or shop upgrades. According to a study by EY, 50% of micro SMEs and 75% of medium SMEs require financial funding as they grow. But despite having similar financing needs to larger merchants, they often face difficulties when obtaining finance from traditional banks. Catering to this market demand, Klarna recently decided to launch its new Merchant lending service in the UK. Finery was the first company to try it out.

How Merchant lending works

Klarna’s Merchant lending is a short-term business financing offering that enables merchants to quickly get the funds needed to grow their business, as well as easily repay their loan with automatic repayments. As a Klarna partner, it’s simple to apply and get access to the money, without the lengthy forms and harsh terms that are normally imposed by banks.

There is only one fixed fee that merchants agree to upfront; no running interest, no hidden fees, no surprises. Klarna can evaluate your business in real-time and, if you are eligible, grant access to funds (from £500 up to £150,000) as soon as the next business day.

Another perk is that you don’t need to worry about late repayments since the money is deducted as a fixed percentage of your daily revenue, as opposed to traditional interest-bearing loans with monthly fixed instalments. If you experience higher sales, you pay back your loan faster, whereas on slower sales days, the repayments don’t kill your cash flow.

How come you decided to use Merchant lending?
“We made the decision based on Klarna’s overall scale and its robust solution for the UK and international markets. We also share a similar approach in terms of company culture, customer obsession, growth and innovation,” says Finery’s Director John Hind.

Would you recommend it to other retailers?
“Yes, definitely. Klarna is a great partner for all the reasons mentioned above. They have an open approach and quickly resolve issues when they do appear. It’s also a fully scalable solution which is crucial in today’s global e-commerce landscape.”

What is the biggest advantage compared to borrowing money elsewhere?
“The availability of merchant lending through Klarna is great for managing the seasonal fashion inventory highs and lows, allowing the business to work at a faster pace. Especially in the early years of a business’s start-up and growth, when managing working capital and cash is a challenge for any merchant. The payback is automatically taken care of at a level you are happy with for your increasing revenue levels.”

Would you consider using the service again in the future?
“Yes, we will do it to fund further growth of the business,” John Hind concludes.

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Read more about Merchant lending here.

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