What measures does Focalpoint Coaching take to manage financial risk and ensure sufficient liquidity?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
The main risks arising from the Company's financial instruments are liquidity risk, interest rate risk, credit risk and currency risk. The directors review and agree policies for managing each of these risks and they are summarized below.
Liquidity Risk:
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. The directors' policy is to have bank overdraft available to maintain short-term flexibility, as well as financial commitments by shareholders in the event of liquidity needs of the Company.
Interest Rate Risk:
The Company finances its operations through a mixture of retained profits and bank overdraft where required. The Company exposure to interest rate fluctuation on its borrowings is managed by the use of both fixed and floating facilities.
Credit Risk:
The Company's principal financial assets are cash, and accounts receivable. The risk associated with cash is limited, principal credit risk likes with accounts receivable.
In order to manage credit risk the directors utilize set limits for customers based on a combination of payment history and third-party credit references. Credit limits are reviewed on a regular basis in conjunction with debt aging and collection history.
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the company identifies liquidity risk, interest rate risk, credit risk, and currency risk as the main risks arising from its financial instruments. To manage these risks, the directors of Focalpoint Coaching review and agree on policies.
To ensure sufficient liquidity, Focalpoint Coaching aims to have enough liquid assets to cover foreseeable needs. The company's policy includes maintaining a bank overdraft for short-term flexibility. Additionally, Focalpoint Coaching relies on financial commitments from shareholders to address any liquidity needs that may arise.
To manage credit risk related to accounts receivable, Focalpoint Coaching sets credit limits for customers based on their payment history and third-party credit references. These credit limits are regularly reviewed in conjunction with debt aging and collection history to ensure they remain appropriate. Focalpoint Coaching also uses a mix of retained profits and bank overdrafts to finance its operations. The company manages exposure to interest rate fluctuations on its borrowings by using both fixed and floating facilities.