Strategy, Finance & Organization
How do companies increase cash flow in times of massive uncertainty?
Cheap money fueling debt levels and highly inflated market valuations have been considered high probability causes for the next global downcycle.
Overview
Cheap money fueling debt levels and highly inflated market valuations have been considered high probability causes for the next global downcycle. The COVID-19 pandemic has now triggered a short-term downturn, with global widespread uncertainty in terms of the severity and longevity of this economic crisis.
During times of crisis, it becomes even more crucial for companies to address and realize cost and capital efficiencies to maintain stable profitability and cash flow when sales decline. Those who are particularly vulnerable during these periods are companies that don’t immediately act and will struggle with low profitability, unstable cash flows, and low cash reserves.
Cost and Capital efficiency initiatives are unavoidable, and it is a necessity to consider “what we can afford” so that we still can deliver stable cash flows to float company operations.
Since 1997 Applied Value has worked with clients on addressing cost and capital improvement opportunities. We have actively worked with clients during three global recessions and have seen that companies historically have underestimated the sense of urgency and necessity of preparing for a downcycle.
When the going gets tough, the tough get going: for companies with decisive leadership, you have a once in a lifetime chance to both improve your immediate cash flow in the short term and sustainably improve your long-term competitive position.