Improving liquidity and working capital

In Strategy and Transactions

Dynamic and disrupted markets, geopolitical uncertainty and ever-growing corporate transparency are putting increasing pressure on companies’ liquidity and cash flows. We help companies forecast, monitor and free up cash via robust, actionable methodologies.

What the EY liquidity and working capital team can do for you

The global network of dedicated working capital EY professionals helps clients identify, evaluate and prioritize actionable improvements to liberate significant cash from working capital through sustainable changes to commercial and operational policies, processes, metrics and procedure adherence.

We can assist organizations in their transition to a cash-focused culture by identifying areas for improvement and helping to implement the relevant metrics. EY teams can also help businesses to address immediate and short-term liquidity challenges of the type generated by threats of covenant breach or revenue disruption. In addition to cash performance transformation, we also support the acquisition and disposal agenda of our private and corporate clients, securing value through a sale process and identifying potential cash risks and upsides on potential acquisition. 

Working capital improvement initiatives create sustainable value. In addition to increased levels of cash and enhanced cash management process and tools embedded in normal operating routines, significant cost benefits may also arise from productivity improvements, reduced transaction and operational costs, and lower levels of bad debts and inventory obsolescence. Focusing on working capital can help organizations to work collaboratively and cross-functionally and improved processes can also improve quality of services, both internally and externally. 

We use a wide range of analytical techniques to rapidly identify drivers of opportunity and areas for further focus, including using interactive digital visualizations. Our analytics identify, evaluate and communicate key issues to management and the wider business. These can be provided on an ongoing basis, hosted and managed by us.

Wherever you do business, our working capital professionals can be there to help.

The benefits of strong liquidity and working capital management
  • Cash flow generation

    • Improve cash flow management and reduce liquidity risk through a comprehensive working capital management strategy 
    • Release cash from the balance sheet and improve working capital for investment in acquisitions, market expansion, innovation, and/or business transformations
    • Support value protection through rapid cash generation where there is an event driven, short-term liquidity need
    • Evidence strong grip and control to potential investors
    • Identify and drive additional value from deal activity
    • Employ the cheapest form of financing available by managing cash flow effectively, and de-leverage the business
  • Improved operational performance

    • Drive more efficient processes by adopting leading practice cash management solutions across the supplier and customer base, in turn improving working capital
    • Help ensure that supply chains are resilient, through robust risk policies, alternative sourcing, and enhanced visibility across the cash conversion cycle
    • Make impactful working capital management decisions based on a broad working capital strategy
  • Cash culture and sustainability

    • Help ensure that cash and liquidity management remain a strategic focus, with the entire organization engaged and incentivized to drive improvement
    • Create discipline through cash flow forecasting, with broad cash flow controls and evaluation processes in place
    • Promote global liquidity and cash management maturity across the organization
  • Stronger market perception

    • Gain more insight into managing cash flow to support quality of earnings and underpin company valuation
    • Improve relationships with customers and suppliers through more effective processes and performance monitoring
    • Build confidence in financing relationships through improved liquidity management and ability to meet debt covenants
  • Navigating cash and liquidity constraints

    • Strengthen short term cash flow forecasting disciplines and tools to support near-term visibility and control over cash
    • Use medium-term liquidity forecasting to understand headroom, liquidity events and funding challenges  
    • Utilize focused cash release initiatives to drive additional cash flow and improve forecast cash profile
    • Employ effective stakeholder management around the group’s overall cash position (board, lenders, investors, etc.)
Results

The global EY network of member firms has facilitated more than US$100 billion of increased cash flow for our clients over the past 10 years. We have experience in building and analyzing cash flow forecasts to either clarify short-term liquidity requirements or help navigate medium- to long-term fund flows.

We leave businesses with a revised cash culture and focus embedded into their governance and operating structures, with the tools, metrics and training required to drive continuous improvement.

Contact our liquidity and working capital consultants to support your business

Talk to one of our professionals about how we can support you during COVID-19.