In 2022 the financing landscape has changed dramatically : jump in energy prices and inflation, increased interest rates and uncertainty in the supply chains 🤷♂️ Free money is no longer the rule, which is challenging for less experienced finance managers. Are these exceptional times? Others have seen this happening before.
📉 At the outset of 2023, no one can predict whether there will be a recession and how deep it might be. This creates uncertainty on the revenue side. Last year we had named this a VUCI world (Volatile, Uncertain, Changing and Inflationary). Bank loan risk appetite framed by regulation and prudential control is typically lower in an uncertain environment.
💡 As a company, now is a good time to review the funding strategy in 2023!
🎰 Any business forecast has become unpredictable due to these numerous uncertainties (geopolitics, social, inflation, revenues, supply…)
📌 Make sure your business plan has built in flexibility, room for downside scenarios, possible shocks. Cash and liquidity buffers, such as an extra loan, are highly important to overcome this uncertain period.
Three examples amongst many:
📍 Inflation impacts working capital. ACCURATE forecasting and FLEXIBLE financing solutions bring relief.
📍 With current interest rates, capex needs to be handled more wisely. So choose your battles and be more SELECTIVE in project financing.
📍 Select the funding mix that works for you and invest time to SHARE your plan and scenarios with to your bankers and stakeholders.
Questions on the above, don’t hesitate to get in touch with us!