How can you manage funding and liquidity risks?
Your company should secure sufficient, well-balanced and well-performing financing in all circumstances. Long-term funding liquidity risks and loan refinancing risks constitute the key risks against which your company should hedge. Your company can mitigate risks through sufficient reserves, such as long-term committed credit facilities and a well-balanced loan repayment plan. .
If your company's available funds and funding opportunities are insufficient to cover cash outflows in all circumstances, it will pose a liquidity risk. Risks may be longer-term structural funding risks or shorter-term liquidity risks. The business of a company in liquidity difficulties may be in great trouble or even end with insolvency caused by lack of liquidity.
Through effective liquidity risk management, the aim is to ensure that your company will be able to fulfil its payment obligations at all times, irrespective of external factors.
Your company should have sufficient cash or other assets in various parts of the Group, in currencies required and available both in the short and long term. Monitoring, planning, close contacts with lenders and foresight form the key in the management of liquidity risk exposure.
Liquidity and funding risk management is integrally linked to the business of all companies; without funding, there are no opportunities to continue business operations.
Contact your local OP member cooperative bank and we will together plan financing solutions for effective funding and liquidity risk management that best suit your company's needs to maintain sufficient liquidity.