Today, inflation exceeds 5% in France. This consequence of several factors (covid-19, disruption of the supply chain, conflict in Ukraine, etc.) is causing a real deterioration of savings and cash. The leader, whether his company or his holding company, should no longer hesitate to turn to consulting professionals to make the right decisions. vital savings, wealth management consulting firm, supports business leaders in managing their cash flow. Igor de Maack, manager and partner of Vitalépargne Paris, explains how to optimize idle cash in this context.
How does inflation affect cash flow?
For the entrepreneur, money represents above all a security envelope. However, this surplus, when inflation is high in a low interest rate environment, quickly loses value. Indeed, with the current inflationary context, it should be known that a sum that is not invested will lose every year in purchasing power value, at purchasing power parity, the equivalent of inflation. Good cash management implies not exposing it to high risks, it is in this complex context that we offer adequate financial solutions.
What solutions do you offer companies and holdings to invest this money?
The business manager needs access to investment envelopes like any saver. The difference lies in the fact that he has an equity, which is often more important, with transmission problems, sometimes complex, in longer investment horizons. We will then direct them to more suitable products, even made to measure.
Therefore, we recommend to our clients, whether their family business or their holding, various solutions such as dedicated structured products, live securities management and selection, but also the possibility of investing in Private Equity. longer term ahead.
Dedicated structured products allow investing in market scenarios through paid and capitalized coupons with an expected return and fixed term. These coupons turn out to be higher than market benchmarks because, despite the negative protections, there is a risk
residual non-repayment of capital.
The management and selection of live securities are controlled with the criterion of the dividend distributed almost certainly. We select stocks that we consider favorable to generate performance over a 5 to 8 year horizon.
Private Equity makes it possible to invest in unlisted companies. It is a riskier, less liquid investment, but one that offers more favorable long-term market opportunities.
However, for operating corporate cash, the level of risk will be reduced because corporate cash must always be liquid and not very volatile.
These investments will always be preceded by carrying out a complete financial and asset audit, assessing the appetite for risk and loss, as well as preparing a summary summarizing the investment objectives and horizons.
What are the risks?
As with any investment, excluding euro funds, there are known and measured risks that increase or decrease the expected return. Our desire is above all to ensure the development and sustainability of our customers’ businesses. In the context of investment projects, unfavorable economic conditions or the vagaries of life, we will always advise our clients on their best interests. Sometimes not investing turns out to be the best decision because inflation is sometimes better than the total loss of a poorly assembled product or a bad valuation of capital risk.
The added value of our mission lies in the desire to support the entrepreneur in every moment of his life as a business leader, from development to transmission.