The end of September 2025 marked another week of volatility in the U.S. economy, largely due to new tariff announcements and a bump in inflation. These trends are impacting the global economy as well. For instance, the 20-member eurozone experienced a 2.1% increase in prices compared to a year prior, marking the highest rate of inflation since April.
When markets tighten, as they are right now, businesses often discover that profitability alone isn’t enough. Cash is what keeps the lights on. Increased costs, rising interest rates, and ongoing supply chain restrictions are all squeezing working capital and intensifying financial pressures.
From a fractional CFO’s perspective, the key lies in proactive cash flow management. With the right strategies, you can maintain the agility you need to adapt in the current market.
Why Cash Flow Pressures Are Rising
Businesses need adequate cash on hand to deal with the unexpected. Several different factors are converging to put added stress on liquidity, including the following:
- Rising Costs: Labor, materials, and logistics are all becoming more expensive, eating into margins
- Higher Interest Rates: Borrowing is more expensive, making it harder to rely on credit lines as a buffer
- Supply Chain Constraints: Longer lead times and unpredictable delays mean more cash tied up in inventory
These factors highlight the need to move beyond static, once-a-year budgeting and toward dynamic, real-time financial management.
Forecasting in Uncertain Times
One of the best defenses against cash flow surprises is rolling forecasts. Unlike static annual budgets, rolling forecasts are updated regularly to reflect real business performance and market shifts. This keeps financial leaders agile and ensures that plans align with changing realities.
Adding scenario planning takes forecasting a step further. Build out best-case, worst-case, and most-likely-case scenarios. This allows you to stress-test your cash position and understand what levers you can pull if conditions worsen. Whether the best choice is to cut discretionary spend, renegotiate terms, or tap into emergency services, you’ll be prepared.
Working with your CPA or CFO to formalize these tools ensures they’re not just spreadsheets but living strategies that guide decision-making.
Building a Liquidity Buffer
A healthy balance sheet doesn’t eliminate risk, but it does buy time. That’s why it’s critical to do the following:
- Maintain a Cash Cushion: A liquidity buffer provides breathing room when unexpected disruptions occur
- Secure Emergency Funding Sources: Establish credit facilities before you need them so you can negotiate favorable terms when you’re in a strong position
- Diversify Banking Relationships: Avoid being overly dependent on a single financial institution and take on multiple partners
Liquidity planning should not be approached with a pessimistic mindset. You’d rather have resources on hand and not need them than the reverse.
Optimizing Working Capital
Don’t think you have liquid cash to move around? There’s a good chance that you have some hidden within your operations. A fractional CFO can help uncover and optimize these areas:
- Accounts Receivable: Shorten your collection cycles by offering discounts and tightening up your credit policies
- Accounts Payable: Negotiate extended payment terms with suppliers where possible, without harming key relationships
- Inventory Management: Adopt leaner practices to avoid tying up excessive cash in slow-moving or overstocked items
Your goal should be to create a more predictable flow of cash through your company to promote stability.
How a Fractional CFO Can Help
A fractional CFO can provide the knowledge and experience needed to incorporate forecasting and working capital into your daily decision-making. They can also help you avoid blind spots and adapt liquidity strategies to meet today’s challenges. The fractional CFO can offer objective insights and hands-on experience to help you along the way.
Partner With Zabel & Co.
Liquidity pressures aren’t going away. But with proactive cash flow forecasting, a strong liquidity buffer, and disciplined working capital management, your business can not only weather the storm but also emerge stronger than ever. At Zabel & Co., we specialize in helping growing businesses navigate uncertainty with confidence. If you’re ready to strengthen your liquidity strategy and optimize your working capital, contact us for guidance regarding how to optimize your working capital.