A guide to debt and investment management
Knowing the structure of your financing and hedging is not enough to manage your debt effectively.
Outstanding debt is mainly comprised of different types of loans, taken out on different dates, with different maturities and different financial conditions. This diversity can complicate debt management, which should be based on a precise inventory of all financing transactions and their various clauses.
Conventional loans, fixed or variable-rate loans, multi-index credit lines often accompanied by usage or non-usage fees, financing through leasing or financial leasing - lenders offer a comprehensive range of financing options, each with its own advantages and hidden costs. This diversity constantly evolves with financial innovations, as evidenced by the recent growth of disintermediated financing, for example.
Regardless of the type of financing used, mastering the main clauses (e.g., duration, interest rate) and ancillary clauses (e.g., possible arbitrations, early repayments, covenants) is essential for debt management if one wishes to optimize its cost and minimize risk.
Debt management: "risk / return" objective
Once the best financing option has been chosen, one of the objectives of debt management is to optimize financial costs.
To achieve this, financial departments have several tools; they can take advantage of opportunities offered by variable rate facilities with multiple options to optimize interest and fees. Depending on the situation, they may also need to restructure certain loans: opt for early repayment if liquidity is deemed insufficiently rewarded, or modify repayment conditions by shortening or extending the maturity date of the debt.
Another objective of debt management is to reduce exposure to interest rate risk. With fixed or variable rates, borrowers are exposed to fluctuations in interest rates, leading to missed or gained opportunities. Managing this risk requires an appropriate allocation of different types of rates.
To effectively manage debt, financial departments will therefore take a number of precautions: monitor financial markets, identify favorable periods, have a clear view of the proposed spread conditions, conduct a precise analysis of each transaction...
Debt management: solutions tailored to your needs
Centralization of financing constantly connected to financial markets, simulation, regulatory reporting, indispensable key indicators... For debt management, Finance Active offers intelligent solutions for monitoring, valuation, reporting, with personalized support.
With Fairways Debt and Optim Debt, optimize your debt management and facilitate your decision-making. The result: improved financial performance.
Key contact
Baptiste Coquelin
Marketing Manager, Public Sector
Key contact
Baptiste Coquelin
Marketing Manager, Public Sector
