Financial Costs

The Basel Accords entailed new rules and requirements for banks’ performance, financial soundness and transparency ratios. Understanding the impact of new regulations is essential for businesses. In this context, and more than ever, relationships with banks are driven by risk-adjusted returns. The appropriate response will be to carry out an impact analysis for the organization of all these changes in order to assess their decision-level relevance in terms of price and financial products. The model developed by Vallstein makes it possible to estimate, through the Return on Solvency indicator, the income and profitability that a particular bank derives from a specific company. This approach underpins the process of reducing Financial Costs:

Incorrect Fees
Through a first analysis identify discrepancies between the agreed price and the amount actually charged;

Inconsistent Fees
By optimizing the mix of banks and financial products, as well as harmonizing conditions between different entities;

More competitive interest rates and fees
Through negotiation with banks to improve the conditions practiced;

Following the analysis, additional cost reductions may be achieved by improving the organizational effectiveness of the finance department (structure, systems, resources and procedures).