The global economy has undergone significant transformation in the aftermath of the COVID-19 pandemic. The pandemic exposed vulnerabilities within supply chains, disrupting global trade and challenging the traditional methods of financing the B2B transfer of goods.
These vulnerabilities created a number of business challenges including increased supply chain risks, inventory management issues, heightened need for liquidity, delayed payments, strained cash flows, and difficulties in accessing traditional financing options.
While supply chain disruption has quieted down with many implementing nearshoring or onshoring as a strategic solution for companies seeking to optimize their operations, executives must maintain a sharp focus on access to liquidity if they want to avoid continued vulnerability.
As most of us know, efficient cash flow management is paramount in times of economic uncertainty. Companies should continue to prioritize the acceleration of cash inflows by implementing measures such as optimizing invoicing processes, negotiating favorable payment terms with customers, and incentivizing early payments.
Simultaneously, a focus should be kept on managing cash outflows through stringent control of expenses and judicious resource allocation. Lines of credit, working capital loans, and other financial instruments can also be key to providing necessary liquidity buffers.
Uncertainty remains a constant in this post-COVID era, making scenario planning and contingency preparedness essential components of liquidity management. Businesses should develop robust contingency plans that account for various economic scenarios, enabling them to respond swiftly and effectively to changing conditions.
The Tradecycle Capital team is here to discuss what financing solutions might be best for your company as you work towards increasing liquidity and cash flow in an ever-changing market.
About Tradecycle
Founded in 2016 by Justin Goheen, Tradecycle provides unsecured Accounts Payable Finance solutions that work seamlessly with Senior Credit Facilities to supplement the working capital needs of its clients. The technology driven solution provides an additional tool to assist clients in managing their working capital through extended payment terms.