Ramaco Finds Liquidity, Better Cash Forecasting with LSQ FastTrack

For Lexington, Kentucky-based Ramaco Resources, selling to a large buyer on end-of-accounting-period (EOAP) terms was causing a cash-flow and forecasting nightmare. Their DSO for a shipment at the beginning of the month could potentially be 75 days.

“There was a lot of uncertainty in our cash management and planning process,” said Trish Claunch, Manager of Treasury Services for Ramaco. “Trying to figure out what’s going to post two months from now on the 15th is a challenge.”

Ramaco Resources faced a working capital problem when a large buyer extended their terms. LSQ FastTrack offered them a solution to shorten their DSO.

The Solution: LSQ FastTrack® 

In October 2020, Ramaco’s buyer began using LSQ FastTrack to provide its sellers with early payments through a supply chain finance program. Ramaco was one of the first suppliers to use the system.

Ramaco felt the impact immediately, with uncertain invoice payment being replaced with speedy and predictable cash flow. Instead of waiting for EOAP terms, Ramaco is now on Net 4 to 5 days with LSQ FastTrack.

“Once we know for sure when the shipment’s going to occur, then I can plan out within a few days, knowing exactly when we’re going to receive the AR,” said Claunch. “Usually about a four-day turnaround (from shipment) is what it’s been. It really helps me, as far as planning goes, to know exactly when that cash is going to come in.”

More Options and Greater Flexibility

Ramaco has had experience with another supply chain finance provider for another customer, but found it to be inflexible compared to LSQ.

“LSQ gives us the option to select which invoices we want to have paid early and which ones we want (the buyer) to pay at terms,” Claunch said. “The other company we worked with it’s all or nothing – either all invoices are paid early or they all go to terms.”

While the certainty and flexibility have helped Ramaco better understand and plan its cash position, Claunch also has been impressed with the onboarding and support from the LSQ team.

“It’s been a very smooth process working with them (LSQ),” she said. “Everybody’s response time has been very quick, especially early on. I had some, probably, silly questions early on that I would send the team, and everyone was very quick to respond to my questions and help me as I made my way through the new process.”

Elk-Creek-Plant-and-Clean-Coal2

About Ramaco Resources

Ramaco operates and develops high-quality, low-cost metallurgical coal in central and southern West Virginia, southwestern Virginia, and southwestern Pennsylvania. They have a development portfolio of four long-lived projects: Elk Creek, Berwind, RAM Mine, and Knox Creek and are considered a pure-play metallurgical coal company with approximately 250 million tons of high-quality metallurgical coal reserves.

LSQ has experience solving the working capital needs of buyers and sellers of all sizes. Contact us today to learn more.

Author:
Andy Cagle
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