FIN.2:5.2 - A delayed receipt also reduces available finance

In a separate constructed weekly account, one corporation has usable opening cash 20, a chosen minimum reserve 10, and no existing drawings. All amounts are in one currency, taxes and ordinary costs are already in the stated payments, and interest on a new line draw is paid after week 3. The supplied payment schedule has no earlier low point within each week.

A drawable line of 50 is additionally limited to 80% of eligible receivables. For this case, eligibility is tested on drawing; no later borrowing-base test or mandatory paydown occurs before the stated week-3 maturity. Eligible receivables are 40 at the week-1 draw date, so the maximum total draw is 32. There are no fees. Drawing 10 just before week-1 payments preserves the reserve; cash after weeks 1, 2 and 3 is 10, 60 and 50 before any repayment. Repayment with stipulated interest 1 after week 3 leaves cash 39. The remedy covers the full stated horizon.

Now a customer’s dispute moves 25 of week-1 receipts to week 3 and makes 15 of the 40 receivables ineligible at the draw date. Unfinanced cash is −25, 25 and 40. The amount needed to preserve the reserve in week 1 is 35, but the line permits only 0.80 × 25 = 20. Drawing 20 leaves cash −5; neither the commitment of 50 nor the eventual receipt removes the week-1 failure.

Suppose the supplier actually agrees to move 15 of week-1 payment to week 2 without charge. With that change and the draw of 20, balances become 10, 45 and 60. After week-3 repayment of 20 and stipulated interest 2, cash is 38. Thus the operating concession and the available finance jointly restore the selected reserve. They are separate attainable actions, and the deferred 15 is paid rather than lost from the model. Without the supplier’s agreement this combined route remains conditional. If payments precede the assumed draw within week 1, refine the account before claiming it works.