Case Study 10
Working Capital Intelligence
Introduction
Early in 2025 Richard Mason and Ian Fletcher were engaged by, a management consultancy business that provides services to bilateral and multilateral agencies, foundations, International NGO and alliances, with a focus on international development. Clients include UNHCR, OECD, FCDO & UNOPS.
As a direct impact of ‘the Trump Effect’ and the withdrawal of ‘US Aid’, their clients were taking longer to pay which resulted in cash flow pressures. Recent losses incurred led to ‘red flags’ from their Bank, requiring the company to reduce a £240k overdraft facility, which with debtors now taking longer to pay, would have escalated the cash pressures.
The Bank also provided a Bonding facility of £110k, to enable the issue of Performance Bonds, which are required under the contracts undertaken and was a facility secured by tangible security. Invoice Discounting Facilities wasn’t an option due to the contractual nature of the company’s projects in overseas markets being not attractive to the Bank.
The Overdraft facility was replaced by a Selective Invoice Finance facility from a funder able to fund obscure export markets and fund debtors of a contractual nature. The Bank was required to agree to ‘release’ specific debtors from their debenture which could then be funded via a ‘Selective Invoice Finance’ facility. The Bank were comfortable to agree to a waiver as it ‘de-risked’ the Bank as the Overdraft facility was removed. The client was then able to access additional working capital.
Ricosta Capital proposed to the company’s bank that it should utilise a General Export Facility, supported by an 80% guarantee from UK Export Finance for the Bonding facility. This reduced the reliance on tangible security.
Challenges
Ricosta Capital was engaged to assist in the restructure of the company’s banking facilities and played a key ‘lender liaison’ role in negotiations with the company’s bankers and the proposal for restructure of the banking facilities which was subsequently sanctioned and implemented.
Ricosta Capital also assisted the client in management of Foreign Exchange risk, introducing the company to a provider able assist in hedging Foreign Exchange exposure, as invoices were predominantly in US dollars and obtaining enhanced exchange rates compared to the existing Bankers, which ultimately had a positive impact on ‘bottom line’.
Outcomes
“Ricosta Capital are pleased to have been able to assist the client in the restructure of their banking facilities, demonstrating our experience and expertise by introducing innovative solutions which have helped to maximise the client’s access to working capital.”
Ian Fletcher
Senior Consultant at Ricosta Capital
