UK: Where to go if caught short by success - Factoring helps designer secure a big order.

UK: Where to go if caught short by success - Factoring helps designer secure a big order. - Rawya Mawafi started Unique Design in 1994, selling glass perfume bottles of a particularly intense and vibrant colour to interior design shops. She designs the b

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Last Updated: 31 Aug 2010

Rawya Mawafi started Unique Design in 1994, selling glass perfume bottles of a particularly intense and vibrant colour to interior design shops. She designs the bottles which are blown in workshops in Cairo.

While the business remained little more than a cottage industry Mawafi used personal funds for finance. But she was convinced that there was a larger UK market for custom-designed glassware and, in 1995, gained her first big break - an order from Boots worth £80,000.

Like many other early stage companies, Unique Designs was caught short by success. It had no finance in place to satisfy the order and the bank was unwilling to extend the overdraft. Mawafi's banker husband, Terek, suggested factoring as an alternative. 'Although factoring is sometimes more expensive,' he explains, 'it is the most effective way to run the liquidity and cash-flow of the company.'

Factoring relates directly to the company's growth. Rather than paying interest on an over-draft or loan with inflexible terms, the company gains finance only when needed, in direct proportion to the size of orders, says chairman of the Factors and Discounters Association Ted Ettershank.

The factor usually prefers to spread the financial risk across a number of orders but, in this case, Fairfax Gerrard advanced 80% of the value of the one order immediately in return for a fee of 10% when Boots paid the invoice.

Mawafi met her order, Unique Designs featured in the Boots Christmas catalogue and gained further orders worth £400,000. Mawafi is upbeat: 'I just don't have to worry. I can approach the biggest retailers safe in the knowledge that we can meet their orders.'

Sarah Gracie is a senior writer at Venture Capital Report.

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