Solving for liquidity, profitability and enterprise value in uncertain times

Most organizations have a financial control tower but lack real-time visibility and understanding into their liquidity positions. Few, if any, use analytics and behavioral modeling to predict what liquidity will look like based on business decisions. Finance should take full and centralized control of all liquidity decisions, supported by cash management analytics solutions.

Working with the business and leveraging data, the liquidity control tower can model working capital pain points and help pinpoint key actions to generate cash. Predictive analytics help proactively identify and monitor invoices with a high likelihood of rejection and disputes. Likewise, increased visibility and controls can ensure that the right discounts are being applied in accounts payable.

The liquidity control tower can help organizations better manage CapEx by ensuring better capital allocation decisions and improving certainty on in- and out-flows of cash. The liquidity control tower team provides insights to challenge predictions on CapEx returns and paybacks and provides both CEOs and CFOs control of all decision-making before the investment is made.

Many companies have resorted to eliminating or drastically cutting costs. These immediate measures are not sustainable. Once the crisis stabilizes, the next priority is to reset the company’s cost baseline for the new reality. This year’s budget will likely need to be redone. New consumer values have surfaced, new opportunities will present themselves and new ways of working will become engrained.

Managing in uncertain times means minimizing risks and variabilizing costs as much as possible. For example, moving to the cloud and software-as-a-service variabilizes fixed technology costs such as data center operational costs and software licenses. Production, distribution and logistics can be outsourced to third parties to reduce fixed supply chain and manufacturing costs and risks.

Striking the right balance between cost and profitability and reinvesting for growth is important. New opportunities will arise from this crisis and the current competitive landscape will change. This is the time to truly understand changing customer behaviors and preferences. Continued focus on cost reduction will provide the funding to invest in these new opportunities and future growth.

This is a unique opportunity to drive a broader ownership culture for costs in the organization and to mobilize the broader organization around ideas to develop smarter ways of working and spending money. This will generate additional savings year over year to fuel growth.

Like any crisis, COVID-19 will result in changes in customer behavior, ways of working and people’s values and behavior. Understanding these trends early is critical to capture these opportunities, grow and become even stronger.

This crisis has the potential to drastically change the competitive landscape in some industries; some of the current competitors might not survive, while new ones might emerge. Running scenarios to better understand the new competitive landscape can drive the future growth strategy.

Implementing discipline around cash and cost management will generate further efficiencies year over year. These efficiencies should be reinvested in strategic initiatives to capture the new growth opportunities and emerge stronger from this crisis.