Harrow textiles supplier set for major expansion

A start-up firm which supplies textiles to some of the UK high street’s biggest brands is on track to take turnover to £1.5 million in its first year of trading, after securing a factoring facility from Lloyds TSB Commercial Finance.

Eurotex Europe Ltd, based in Harrow, North London imports fabrics for the ladies garment industry. The materials, which include wool, linen and polyester, are shipped from Indonesia, Turkey and Taiwan and then supplied to manufacturing firms which make clothes for Topshop, Marks & Spencer, Tesco and New Look.

The business has enjoyed considerable growth since inception less than three months ago. In order to free up cash to enable it to capitalise on increased demand, the company approached its banking partner Lloyds TSB Commercial to find a way to fund expansion plans.

The bank introduced the firm to its asset based finance division, Lloyds TSB Commercial Finance which provided the company with a £240,000 factoring facility.

By releasing the value of Eurotex’s sales ledger, the funding package allows the firm to take advantage of new opportunities by bridging the two month gap between purchasing raw materials from abroad and receiving payments from clients.

Factoring advances the value of up to 90 per cent of unpaid invoices, enabling a business to keep on top of overhead costs, without draining its working capital.

The facility also means Lloyds TSB Commercial Finance manages Eurotex’s debtor book by issuing statements and reminder notices on its behalf.

The funding has enabled Eurotex to fully capitalise on demand by increasing headcount and moving from Borehamwood to bigger premises in Harrow.

To safeguard against the risk of bad debt, Lloyds TSB Commercial Finance also included a debtor protection policy in the finance package. The trade credit policy protects a company’s working capital by ensuring it receives payment of outstanding invoices should a customer become insolvent.

Joseph Laporte, managing director for Eurotex, said: “Like many firms in the textiles industry we deal with overseas suppliers and large corporations, a situation which can mean a 60 day wait before invoices are paid. This became a huge strain on our cash flow, especially as we are a relatively new business.

“We were not expecting such rapid growth during our first few months of trading so it was vital that we had a supportive funding partner like Lloyds TSB to provide guidance and put together a flexible and tailored solution.

“This takes the strain off having to manage our sales ledger and, along with the debtor protection policy; we are now able to make the most of increased demand without worrying about running out of capital.”

Anne Lundqvist, regional manager for Lloyds TSB Commercial Finance, said: “The textiles industry has endured the economic downturn relatively well compared with other sectors, and there are some great opportunities out there for start-up firms like Eurotex.

“Like all new businesses, especially one which trades with overseas markets, Joseph and his team needed a healthy cash flow to deal with extended payment periods.

“In this instance, factoring was a real help as it generates not only working capital but also reduces the administrative burden, allowing the firm to concentrate on its growth strategy.”

Lloyd Powell, relationship manager for Lloyds TSB Commercial, said: “We worked closely with the management at Eurotex and our colleagues from across the Lloyds Banking Group to arrange a funding solution that best suited the company’s needs and will facilitate its continued expansion.”