Evidence that companies are turning to letters of credit (L/Cs) as they adapt to working under coronavirus crisis conditions has been underlined by UK-based wireless communication technology provider CyanConnode Holdings when it announced its audited results for the 15-month period ended 31 March 2020.

The company said it had turned to L/Cs, not only in response to the crisis, but also to alleviate financial problems caused by delays in a major Indian contract.

L/Cs for working capital

"During 2020, as existing contracts started to roll out, the company began to utilise L/Cs to meet its working capital requirements, thereby mitigating the need to raise further funding," according to the company's executive chairman, John Cronin.

He added that the company is focused on delivering significant volumes of its products to customers and said he was pleased to report that the company is now at an advanced stage of agreeing a significant contract for a large number of units.

L/C helps restore contract

The company, which posted a pre-tax loss of £6.2 million (US$8.16 million) on revenue of £2.5 million for the period, said that while its results were hurt by the delay to an Indian contract worth around £10.3 million, that contract has now resumed.

Cash has been received for the first 20,000 units and for a further 20,000 units a CyanConnode statement said. It also said an L/C has been secured for the remaining deliveries on the Indian contract.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.