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Addressing the cash flow paradox

Liquidity management has been top of mind for CFOs during the COVID-19 crisis and, in all likeliness, will remain a pivotal consideration as organisations slowly emerge from lockdown. Government funding to support employees and businesses will be reducing and it is doubtful that many businesses will be able to fund the working capital requirements of a complete restart. Careful consideration needs to be given to the cash implications of different levels of activity. 

Perversely, restarting could quickly lead to ‘over-trading’ because the working capital requirements of restarting outstrips cash receipts. Even businesses that entered this crisis with strong balance-sheets are finding that they are impacted by customers who are struggling to pay – no organisation is immune from the adverse impact that the current crisis may have on cash positions.

Proactis Holdings Plc (LON:PHD) develops and sells business software, and provides installation and related support services in Europe and the United States. The company offers Spend Control and eProcurement solutions that help organizations to improve operational and financial performance by enhancing the way they buy various goods and services.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.