St Albans clothing company receives banking boost

A FLEDGLING St Albans business which manufactures and supplies knitted garments to some of the UK’s biggest high street retailers is set to break its �3 million sales target after securing a factoring facility from Lloyds TSB Commercial Finance.

Cupcake Clothing Ltd was established in February by Jo Johnson-Mathers, who previously owned a similar knitwear business which was sold in 2003 to a large Chinese trading company.

Cupcake’s knitwear is aimed primarily at the pre-teen market, and is sold in Tesco, BHS and New Look in the UK, as well as C&A stores across Europe.

The six-strong team designs the garments and sources the raw materials to manufacture its products from China, Bangladesh and Turkey. Since most of these suppliers operate on a pre-payment basis, this can create up to a 10 month wait for payment and puts pressure on working capital.

To boost the firm’s cash flow, Cupcake Clothing approached Lloyds TSB Commercial Finance which devised a �250,000 factoring facility to advance the value of invoices to customers, thereby bridging the gap between sales and receipt of payment.


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As the knitwear trade is typically a seasonal market, this facility has stabilised the cash flow and helped the business deal with the peaks and troughs which inevitably affect a firm’s working capital.

The firm is now on target to reach its seven figure turnover target by the end of 2010.

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Jo Johnson-Mathers, managing director of Cupcake Clothing, who has significant experience in the knitwear industry, said: “We established the business because we felt there was a gap in the UK retail market for a company with specialist knowledge and fashion awareness in children’s and pre-teen knitwear.

“We are a chain partner, rather than a basic importer or wholesaler, and we feel we have a niche business and are able to advise and offer market intelligence to generic buyers of the high street chains and supermarkets.

“Our clothes are designed in the UK, manufactured in Asia and sold across Europe. As a new business, factoring was the perfect solution as it grows in line with sales and seasonal fluctuations.”

Matt Burns, regional manager for Lloyds TSB Commercial Finance, said: “According to government figures, clothing imports account for 90 per cent of the total clothing market. The management at Cupcake Clothing have a wealth of experience in the knitwear sector and the business has grown impressively in the past six months from a new start, although this has added pressure to the firm’s liquidity.

“In order for the firm to be able to capitalise on the opportunities, our funding ensures that the company has access to working capital during the time between raising an invoice for its international customers and receiving payment.”

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