The screenshot No. 1 above illustrates the methodology of how a trust and retention account works. The blue field, which includes all subfields, is the trust count, with fields smaller than the sub-accounts of the receiver account. Each project will have two distinct phases: the construction phase and the operating time. Let us understand the fundamental differences in the flow of means over these two periods. Escrow AccountFor each project company, the revenue generated by the project is the sole source of revenue and all of the company`s commitments (including taxes, expenses and repayment of principal and interest) are honored by these revenues. Therefore, in order to have an adequate monitoring mechanism, it is essential that all project revenues are transferred through a joint bank account. An Escrow account is an account that corrects this problem. The project company opens a single bank account called escrow Account, which receives and executes all payments made in the company. Trust and retention A simple fiduciary account is just one overhead account in which all funds (equity, debt, income and expenses) of the business are transferred. However, the lender cannot have a Service Reserve Account A (DSRA) is a cash-buffer that is created and maintained. All funds raised for the implementation of the project are transferred via the construction time account. Sponsors put funds into the sponsorship capital account (the funds are provided according to the terms of the loan agreement).
Similarly, lenders` loans are paid into the credit account (disbursements based on the debt ratio and other conditions). Any other type of project financing is also transferred via the construction account. All of these sub-accounts are referred to as „flows“ from the construction period account (as shown in screenshot No. 1). The funds in the construction account can only be used for specific purposes for the execution of the project.