NZEC supports Maven International deliver education services into the Middle East
When Maven International Ltd secured a large contract in Oman, the Wellington-based company knew it had to prepare for cash flow disruption.
In Oman, sign off processes for payments can often move slowly. Layers of sign-off are required for every payment and invoices can stall (sometimes for months), during the process.
Maven’s consultants had worked in the country before, reviewing its education system. This new contract, awarded to a New Zealand consortium of which Maven was the lead, was to address one of the shortcomings identified in the nationwide education review. The consortium was engaged to provide face-to-face and online leadership training for school Principals across the country.
Although the contract’s standard terms stipulated 30-day payment, Maven had experienced payment delays of several months while delivering other contracts in the region. As senior managers planned the rollout of the $2.2 million, two-year training contract in Oman, they were concerned that potential payment delays might impact their ability to pay staff and suppliers.
Maven International Ltd Managing Consultant Darryn Thorn says the company needed to pay for accommodation, rental cars, travel back to New Zealand and salary packages.
“These are our people; we need them to have certainty and stability” added Thorn.
This is where the NZEC came in. As soon as the company awarded the contract, Maven and its bank, ASB, applied to the Treasury’s New Zealand Export Credit (NZEC) for a loan guarantee. NZEC’s backing enabled ASB to offer a working capital facility so Maven could maintain cash flow and pay all its bills during the weeks and months it might take for payments to start flowing.
Maven’s bank, ASB, had supported the company through previous campaigns in Oman. ASB Bank’s Head of Trade Finance, Mike Atkins took comfort in Maven’s cautious approach and in the company’s experience in Oman.
“Our previous experience suggested the bureaucratic processes of Oman would delay payments, which could result in undue pressure being applied to Maven’s cash flow. By partnering with NZEC we were able to deliver a solution that enabled Maven to optimise their working capital position and maximise value for their shareholders from this contract” said Atkins.
As it turned out, the first payment for the Principals’ training contract took nine months to come through. Maven drew down $300,000 from the ASB working capital facility to keep its operations in Oman ticking over. This gave Maven a great deal of peace of mind.
“In the end, with it taking nine months for payments to begin, we were grateful for that working capital facility. It was a good move to set it up way in advance” says Thorn.
NZEC’s Michael Hoare agrees. “It gave us great confidence in Maven to see that the company was thinking ahead and looking for a plan to offset possible delays. It showed very prudent planning, and enabled the company to thrive and grow in other areas as it was, financially at least, unaffected by the payment delays in Oman.”
For Maven, the uncertainty would have caused significant stress, especially as the months dragged on, and the financial drain would have kneecapped the company’s growth in other areas.
“All in all working with NZEC was a smart move” says Thorn.
Maven International Limited: http://www.consultmaven.co.nz/