+27-83-556-2466

What is the significance of liquidity risk to our organisation?

WellCapital can help – we design, develop and implement the necessary liquidity risk methodology to address the liquidity wellbeing of the organisation.

The financial stress experienced by organisations can intensify exponentially due to external and internal factors, as can be seen by the impact of Covid-19 worldwide. The ability of the organisation to manage liquidity health within such conditions are further complicated without the necessary tools, oversight and insight to act decisively and expediently.

The primary objectives of liquidity risk, include:

  • Ensure sufficient cash availability in the right form and location;
  • Influence daily cash management decisions;
  • Influence business decisions;
  • Identify funding requirements and appropriate sources and application of funds;
  • Assess the affordability of the budget;
  • Measure financial sustainability over medium to long-term; and
  • Evaluate impact of strategic decisions such as acquisitions, disposals, restructuring

The liquidity risk management methodology includes policies and models which allow the organisation to organise and re-organise the underlying business models in a manner to identify and analyse the cause and effect of business decisions on financial sustainability. The models provide the necessary information and metrics to assess the affordability and performance of budgets, business plans and strategies in the short to long-term.

In times when liquidity concerns are priority, it is necessary to understand what sources of funds and relief are available and how to access them. WellCapital has the necessary skills and experience to assist organisation in procuring the required funding and assistance throughout the lifecycle of the transaction, whether it is being sourced from external or internal sources.

The sources and application of funds are addressed in this focus area to optimise current and future requirements. Support is provided in the procurement of new funding and/or the restructuring/refinancing of existing facilities and funding.

How do we determine the value of a business?
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What should our audit committee’s responsibilities include to achieve oversight on the liquidity and foreign exchange risks?

    WellCapital provides corporate finance advisory solutions with the focus on business valuations, financial performance evaluations and due diligence assessments. We act as lead or change-agent in business turnaround and interventions which can result in new or amended busines models, capital structures, mergers, acquisitions, disposals, business processes and forensic investigations.

    WellCapital provides treasury advisory solutions with the focus on the various financial risk portfolios (liquidity risk, foreign exchange risk, commodity risk) arising as exposures from the underlying business models in order to develop appropriate risk management policies and strategies with performance metrics. The reconciliation of these performance metrics with the treasury accounting results is undertaken to provide both operational and strategic understanding.

    The liquidity risk management includes:
    - short-term and long-term cashflow forecasting using predictive modelling to identify the funding requirements and facilitate the operational and strategic decision making
    - mapping of all bank accounts and optimisation of banking and lending facilities
    - restructuring and refinancing of asset and liability portfolios
    - interest rate risk and credit risk management
    - obtaining credit rating and debt issues
    - optimisation of working capital management
    - alignment of cashflow forecasting with operational budgets and variance reporting based on actual cashflows
    - development of local and global cashflow pooling
    - implementation of intercompany financial support and transactions
    - obtaining the necessary regulatory approvals to ensure compliance and control
    - the treasury functions and responsibilities within the organisation should have the correct structures and systems to realise the potential positive strategic impact and value added.

    WellCapital provides expert and independent advisory services to Board committees and within legal proceedings.

    WellCapital prides itself in providing value‐added solutions and services to a wide variety of clients and markets which transcends industry and size and offer the services in a variety of ways to accommodate the requirements and priorities of our clients

    ADDRESS

    15 Pulipit Street, Southdowns

    PHONE

    +27 83 556 2466

    EMAIL

    dries.ferreira@wellcapital.co.za