Redrok set to increase turnover by 100% after securing a factoring facility

A branded corporate gift supplier which was badly affected by the downturn has now returned to profit and is set to double turnover in the next eight months, after securing a factoring facility from Lloyds TSB Commercial Finance.

Plymouth-based Redrok supplies a wide range of promotional merchandise, including branded pens, bags, t-shirts, calendars and business cards to a variety of clients including Holiday Inn, the NHS, Pioneer and the England Athletics team.

Established in April 2005 in the home of managing director David Williams, the business steadily gained a strong and varied customer base ranging from large corporates to SMEs and moved to two industrial units in Plymouth to enable the firm to capitalise on demand.

The economic downturn began affecting the business in March 2009. “It was awful. The first thing to be chopped from budgets was corporate gifts and in a few weeks our turnover had fallen by 80 per cent”, David said.

Redrok had to make drastic cutbacks in response to the decline in business, which included losing staff and one of its industrial units.

However, by October of last year, David and his team found the market picking up and were keen to make up the shortfalls. This led to the slimmed down business stretching its cash flow as it attempted to capitalise on the increased demand.

Management needed a solution, so approached their banking partner of five years, Lloyds TSB Commercial, which introduced the company to the invoice finance division of the bank.

Lloyds TSB Commercial Finance provided a £60,000 factoring facility, which leverages the value of a firm’s sales ledger to free up cash flow. This provides Redrok with the capital required to target new business opportunities and invest in new equipment, including new computers and telephones.

Now the business, which currently employs eight people, is winning new contracts on a weekly basis and is on track to double turnover, taking it to seven figures by April 2011.

David said: “The corporate gift market as a whole suffered, but then when the industry picked up we had just scaled down and did not have the resources to take advantage of any new business which came our way. We found that we needed funding quickly to expand the company and sustain the growth achieved.

“Our Lloyds bank manager stayed close to us during the recession and provided additional guidance which allowed me to fully get to grips with our finances.

“The factoring facility provided by Lloyds TSB Commercial Finance was implemented immediately and meant we could fund the wholesale purchase of stock and expand the business in line with sales.

“Our recovery is largely down to this facility as it relieved cash flow problems and allowed us to focus on our growth strategy. As a result, we saw a 200 per cent increase in turnover last month and we are hoping to take on more members of staff.”

Roger Edwards, regional manager at Lloyds TSB Commercial Finance, said: “Factoring was the ideal solution for Redrok as it quickly injects capital into the business, reinvigorating cash flow and, as the business continues to grow; more funds can be released to support its expansion.

“David and his team are a real inspiration for other SMEs who have suffered during the recession, showing that with the right funding, support and business strategy, management teams can capitalise on an improving economy.”

Shirley Treleaven, relationship manager at Lloyds TSB Commercial, said: “We have supported Redrok since inception and it is great to see the business flourishing, despite operating in one of the industries worst-hit by the recession.

“By working closely with the company, we were able to identify the best funding package to support its recovery, as well as boosting turnover, recruiting more employees and expanding the business.”