How a supplier to Data Centres financed contracts using Receivables Trading.
The Company had recently won contracts to design and integrate an engineering solution for two Data Centre developments. Total project duration is 15 months with projects running concurrently. Overall projected costs were €4.7m with €1.8m already expensed. Core costs related to wages and materials with payment lead times extending to 90+ days allowing for payment certificates and credit terms.
The Company required working capital to fund labour and monthly project costs.
They leveraged their high-quality Receivables to release capital in two ways:
- Traded 70% of the value of Un–Invoiced Work – work complete but not yet signed off for invoicing
- Traded 90% of existing approved milestone payments to release funds
Receivables Trading enabled the company to pay suppliers upfront and labour on a bi-weekly basis. Funding was not limited by Debtor Concentration or transaction size.
This method of project financing ensured the optimal level of working capital to fund both contracts.