Covid-19: Capital goods firms experiment with contracts, chase payments

Coping with Covid: Shorter credit-cycle deals, bank guarantees on pro-rata basis the new norm

Covid-19 and the ensuing lockdown might have slowed production of capital goods companies, but some firms managed to adapt and use the downtime to chase payments and enter shorter credit-cycle contracts. In addition, some clients are releasing bank guarantees earlier than usual, helping such firms.

R Shankar Raman, chief financial officer and whole-time director of Larsen & Toubro (L&T), said in the company’s June quarter earnings call that if there was a bright spot in the tough quarter, it was the company’s ability to reconcile payments, sign off and get these bills cleared. With time in hand to chase dues,