Reading the information together
The bank balance shows a position at a point in time. Repayment capacity also depends on the schedule of commitments and the operation’s cash generation. Examining this information together helps distinguish short-term pressure from problems requiring a broader review of the business.
Liquidity
Reviewing debt requires understanding when cash comes in, which commitments fall due and how much the operation needs to continue. The analysis connects the financial schedule with the company’s repayment capacity.
Expected receipts, available funds and commitments already made need to be distinguished. This view helps identify periods of cash pressure.
Assessment questions
Which commitments fall due before receipts arrive?
How are debt maturities, costs and collateral distributed?
How do costs, margins and working capital affect repayment capacity?
Which financial and operational alternatives need to be compared?
Information map
The assessment brings together balances, receivables, payables, debt contracts, costs and margins. It also identifies incomplete information and assumptions that need review.
The debt map organises creditors, balances, maturities, charges, collateral and contractual terms. The cash forecast allows these commitments to be examined alongside operational needs.
Alternatives
Extending maturities, renegotiating terms, reorganising working capital and reviewing operations address different problems. Comparison considers the effects on cash, cost, collateral and repayment capacity.
Sales of assets, units or equity interests may be included in the analysis when relevant. The choice depends on business viability and the terms of each alternative.
Monitoring
Each measure needs owners, up-to-date information and decisions within the company’s approval limits. Monitoring compares expected commitments with actual cash movements.
When contracted, Cash Management forecasts 13 weeks, with weekly updates. Controls implementation and other analyses have specific scopes.
Decisions and responsibilities
Three Threes carries out assessment, information preparation and negotiation support according to the contracted project. The company retains its decisions and payment authorisation.
The analysis compares available options and identifies conditions still dependent on creditors or counterparties.
What to assess in your company
Organise commitments in 13-week cash flow and compare proposals in the Credit comparison tool. A restructuring situation also requires analysis of operations and business viability.
References
Comitê de Pronunciamentos Contábeis, CPC 03 (R2) — Demonstração dos Fluxos de Caixa
Banco Central do Brasil, Cuidados na hora de contratar uma operação de crédito