Infrastructure cash receipts do not always arrive on the same dates as financing obligations. Rajeev Khandelwal’s documented project finance experience offers a useful perspective on that mismatch. A debt-service reserve can hold cash for specified repayment needs. The reserve adds resilience to timing shocks, but it should not be mistaken for evidence that the project can sustain its obligations over the full financing period.
Identify the intended shock
A reserve may address delayed customer payments, seasonal revenue or a temporary operational interruption. Its size should relate to the risks it is intended to absorb. A generic amount can be too small for the actual collection cycle or unnecessarily expensive for a stable operation. The commercial analysis should connect the reserve balance with realistic disruption scenarios and the time needed for management to restore normal cash flow.
Recognise the funding cost
Cash placed in reserve cannot simultaneously fund construction, inventory or distributions. The project budget should include that requirement from the beginning. If a reserve is funded late, it can create an unexpected draw on operating cash just as the facility is trying to build utilisation. Treating the reserve as part of the financing plan makes the total capital requirement more transparent to sponsors and investors.
Explain replenishment
Using the reserve solves an immediate payment problem but reduces the protection available for the next one. The structure should show how and when the account is rebuilt. Replenishment may take priority over shareholder distributions or other discretionary payments. A forecast that repeatedly relies on reserve withdrawals without credible restoration signals a deeper cash-generation issue rather than a temporary timing mismatch the reserve was designed to manage.
Buffers need an operating explanation
Credit Connect’s project and debt finance disciplines sit within Rajeev’s broader capital ecosystem. Reserve accounts illustrate the difference between financial resilience and business viability. A useful buffer gives a sound project time to recover from disruption. It cannot permanently substitute for customer demand, reliable operations or adequate margins. The financing conversation improves when all parties understand both the reserve’s purpose and its limits.
