What is required stable funding in SAP FS-LRM - Liquidity and Risk Management?

SAP Term: required stable funding

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: The portion of those types and amounts of equity and liability financing expected to be reliable sources of funds over a one-year time horizon under conditions of extended stress. The amount of such funding required of a specific institution is a function of the liquidity characteristics of various types of assets held, off-balance sheet contingent exposures incurred and/or the activities pursued by the institution.

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• Key Concepts: 
  Required stable funding is a concept used in the FS-LRM Liquidity and Risk Management component of SAP. It is a process that helps companies ensure that they have enough liquidity to meet their financial obligations. This process involves analyzing the company's current financial situation and forecasting future cash flows to determine the amount of funding needed to cover any potential shortfalls. 
  
  How to use it: 
  The required stable funding process can be used to identify potential risks and develop strategies to mitigate them. Companies can use this process to assess their current liquidity position and determine how much additional funding they may need in order to meet their financial obligations. This process can also be used to identify potential sources of funding, such as loans or investments, and develop strategies for obtaining them. 
  
  Tips & Tricks: 
  When using the required stable funding process, it is important to consider both short-term and long-term cash flow needs. Companies should also consider any potential risks associated with obtaining additional funding, such as interest rate fluctuations or changes in market conditions. Additionally, companies should ensure that they have adequate liquidity reserves in place in case of unexpected cash flow needs. 
  
  Related Information: 
  The required stable funding process is closely related to other concepts such as liquidity management, risk management, and cash flow forecasting. Companies should consider these concepts when developing their overall financial strategy. Additionally, companies should consult with a financial advisor or accountant when assessing their current liquidity position and determining how much additional funding they may need.