A frame agreement is a contract between your company and finance partner, it is set up to simplify the order handling process by not requiring an authorized signatory to standalone leasing contract for each order.
The frame agreement is always connected to a set limit which is decided by estimating your company’s order value for the upcoming 6 months, it can also in some cases be 12 months, and then performing a credit check on your company to ensure you are eligible for that credit amount.
Frame agreements can provide a number of benefits for both parties, including cost savings, reduced administrative burden, and increased efficiency. However, it is important for both parties to carefully review and negotiate the terms of the frame agreement to ensure that it is fair and mutually beneficial.
Some variables to take into account about frame agreements:
- A frame agreement is for a specific product, i.e one frame agreement for iPhone 12 and a second frame agreement for iPhone 12 Pro.
- A frame agreement is for only one leasing period, 24-, 36-, 48-, 60-months. There could be multiple frame agreements for one product category, having different contract lengths.
- One-off purchases cannot be added to a frame agreement as it is only for leasing.
- An order placed through Velory can consist of both products which are included or excluded in a frame agreement.
As said above, a frame agreement doesn’t necessarily cover all of the available products in your store. If a new order consists of products both included and excluded in a frame agreement, the financing partner will generally contact your company asking to add products to the frame agreement. If you decide not to include a product ordered in the frame agreement, a new leasing contract will have to be signed by an authorized signatory as per usual.
If your company signs a frame agreement of e.g. 500k SEK, then all products which are tied to a frame agreement would go via the frame agreement until the limit of 500k SEK is reached. At 80% of the limit reached, your company will be contacted and asked if you would like the limit to be increased, and if so perform another credit check.