Cash Management and Liquidity Generation

The life blood of a company is its liquidity, especially if the company is distressed. This liquidity is required to ensure that it can meet its payment obligations to its suppliers and lenders. The solvency of a company directly impacts the confidence level that the stakeholders have and is therefore of utmost importance for a company’s well being and its ability to operate and develop.

Sufficient liquidity assures that a company has time to weigh options to restructure its business when required and to adapt to the changing economic environment. Lack of liquidity reduces these options and might lead to sale or liquidation of the company.

It is therefore crucial that troubled businesses launch internal actions to alleviate the liquidity shortage at the first signs of distress. Such actions include working capital management, cost reductions and prioritized investment behavior. Such actions will generate the liquidity to allow for operational changes and even leave time to explore mutually agreed solutions with creditors, if so required.

In theses distressed situations it is essential to obtain a quick understanding of the cash flows, its sources and its applications. This will allow for an effective cash management to put the business back on track towards growth and prosperity.

Reporting systems that adequately reflect the current and forecasted cash positions are critical to manage the company to not only to instill confidence with it bankers but also to ensure that the correct operational actions are deployed.

Ascend Partners uses proven methodologies which have originated in the field together with a large doses of common sense to ensure a results focused cash culture in the organization. Our process focuses on increasing the pace of collections and containing disbursements.

These principles have been successfully applied on numerous occasions and across many industries.