Case Studies

Real-life examples

Funds for growth

Diaspora worked with a UK-based elderly care provider provides services to care homes run by local councils and the national healthcare service. It currently sends carers and nursing staff for care homes, and provides a reconciliation of service hours provided and an aggregated invoice to the national healthcare service at the end of each month. Standard payment terms are 30 days from invoice date.

The problem: the company’s monthly expense and wage obligations are £125,000. By the time the company receives the payment of its invoice, as much as two months after services were provided, it will have a pipeline of invoices outstanding totalling £250,000. As a result, the company requires working capital of £250,000 at all times to ensure everything is paid on time whilst waiting on payment of its accounts receivable. The company may not be able to accept any new business unless it increases its capital, which will be difficult to achieve if all of its cash is tied up in serving its current agreement.

Solution: Invoice finance By leveraging the power of invoice finance, Company A can free up liquidity and put it to work to grow the business. Through this solution, Company A was able to upload its monthly invoice on the date of issue to the DiasporaFinance platform, which enabled it to access instant liquidity to pay wages, rent, and accept new business.

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Lower costs of capital

Diaspora worked with a construction and engineering company that regularly wins project tenders from government and private sector around the world. It primarily operates in the civil engineering, public works and highways segment.

The problem: while some of the projects the company wins include staged payments, the majority of them are not fully paid until completion, meaning it is forced to cover up-front costs including materials and labour upon winning the contract, with repayment often not coming in until a year later.

Solution: contract finance Using contract finance, Company C was able to unlock the cash it needs to manage its projects efficiently as soon as it lands the deal. By borrowing against its signed contracts, the company can cover the costs of project completion and free up working capital ready to take on more contracts.

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Reduced cash cycles

Diaspora worked with a UK-based manufacturing company which sells machinery to global automotive firms. It imports components from suppliers based in the EU and China, manufactures them in its UK plant, and then ships them to clients around the world.

The problem: the company’s supplier payment terms range from 30-45 days. However, its average cash conversion cycle – that is, the number of days it takes the company to convert its investment in inventory to sales – is 90 days. As a result, the company has to maintain sufficient working capital on hand to cover costs for 45-60 days after paying for supplies, before receiving payments from clients.

Solution: Supplier finance Using supplier finance, Company B can delay payment of supplier invoices until it has the cash on hand from payment of its invoices, smoothing working capital and freeing up liquidity to keep the business running.

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