Optimizing Debt Repayment Strategies: Tranches, Revolving Credit and Cash Flow Management Discussion

The State Changers had a productive meeting, focusing mainly on the optimization of their dynamic system and the structuring of debt tranches.

One of the participants managed to significantly improve the performance time of their system by replacing the 'reduce' function with 'sum' and adopting a 'forEach' approach. The main discussion revolved around a unique type of debt called the 'revolving credit facility'. The participant was unsure where to categorize it in their system as its mechanisms differ from the traditional tranches. Broadly, the credit facility resembles a liquidity form that is drawn when needed and paid when able and has seniority in case of bankruptcy. The solution suggested was to view each debt tranche, the revolver, and even the cash flow sweep as 'actors' in a play, impacting the 'stage' - the company's balance sheet. Each actor affects the stage in a particular sequence and manner. Thus, it was proposed to loop through each type of actor (tranches, revolver, sweep) separately to manage their different behaviors. In the end, each actor and the stage would have an end state that could be recorded. While the participants didn't use the mentioned technologies and languages (such as Xano, FlutterFlow, Retool, Bubble, etc.), their conversation could well apply for building the logic in any of those platforms. This meeting would be particularly informative for people dealing with debt management or building algorithms to handle different types of debt.

(Source: Office Hours 9/18/2023 )

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