We engage in a detailed dialogue with the client to project key balance sheet metrics and cash flows for the long-term future. This shows how the underlying need to borrow may change, and so guides our advice on prudent levels of debt and investments to be held.
By incorporating the interest rates on current loans and rate forecasts, we project future interest costs. Finally, we build in the volatility of interest rates and the uncertainty of the client's cash flow forecasts to show the variability in projected interest costs. Together with an understanding of the client's risk appetite, this informs our advice on the appropriate mix of fixed and variable rate debt.
Although balance sheets and Treasury Management Strategies are typically produced only once a year, cash flow and interest rate forecasts change regularly. The online tools developed by Arlingclose — including a live “liability benchmark” that can be edited by clients — make it easy to track the borrowing requirement and comply with the latest CIPFA codes.