Financial Backers | Exploration of Risk Management Strategies & Loan Details
Company Maintains Liquidity and Creditworthiness with Multiple Funding Strategies
In a bid to ensure financial stability and flexibility, the company employs a multifaceted approach to maintaining liquidity and diversifying funding sources.
- Maintaining Liquidity
The company maintains liquidity by strategically managing its cash reserves, short-term investments, lines of credit, and factoring receivables. By balancing the need for security, flexibility, and investment returns, the company mitigates risks such as market fluctuations and cost of credit lines. Advanced analytics are used for real-time liquidity management, helping the company forecast cash flow needs, manage receivables/payables, and size liquidity buffers more precisely.
- Diversifying Funding
The company diversifies its funding sources by using a mix of internal cash reserves, lines of credit, and optimizing the use of idle cash across accounts or entities. This strategy reduces dependency on any single source and improves funding flexibility. Leveraging internal or intercompany funding sources and strategically deploying non-operating cash or low-yield deposits helps manage liquidity without incurring excessive debt or costs.
- Anticipating Business Needs
The company anticipates its business needs by employing cash flow forecasting, segmenting cash by when it will be needed, and using advanced risk prediction tools to reduce variability. This strategic focus enables the company to be prepared for unexpected disruptions, manage cash prudently, and evaluate growth opportunities aligned with liquidity availability.
- Maintaining a Strong Credit Rating
To maintain a strong credit rating, the company focuses on disciplined liquidity management, minimizing expensive debt, and retaining stable cash reserves. Consistently paying down high-interest debt, managing operating costs, and optimizing the cash conversion cycle demonstrate creditworthiness to rating agencies. Transparency through real-time liquidity monitoring and compliance with regulatory expectations also supports credit standing by reducing financial risk and ensuring operational resilience.
The company's strategies for maintaining liquidity, diversifying funding, anticipating business needs, and maintaining a strong credit rating involve a combination of effective cash flow management, diversified funding sources, proactive financial planning, and disciplined credit management.
In addition to these strategies, the company has also secured a loan from the European Investment Bank, has a solid balance sheet, and maintains an efficient presence in Debt Capital Markets. The company uses the Euro Medium-Term Note program for medium-term funding, the US Debt Capital Market for medium and long-term funding, and the US Commercial Paper program and the French Commercial Paper program in the short term through capital markets. Furthermore, the company has committed credit lines in place for potential future needs, a Sustainability-linked Revolving Credit Facility with banks, and accesses these programmes to match assets or businesses of long-term nature. The company aims to maintain ratings in the single-A category in the medium term.
The company maintains its financial stability by strategically employing multiple funding strategies, such as managing cash reserves, short-term investments, lines of credit, and factoring receivables (maintaining liquidity). To further improve funding flexibility, the company diversifies its funding sources, using a mix of internal and external financing options (diversifying funding). These strategic financial decisions not only help to manage risks such as market fluctuations and cost of credit, but also support the company's aim to maintain ratings in the single-A category in the medium term.
