Shelter from the storm

Applying effective cash management to facilitate investment

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Stern Stewart & CO. GmbH
Salvatorplatz 4
80333 Munich

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MANAGEMENT SUMMARY

In spite of the shadow on the horizon cast by the economic situation and the ongoing euro crisis, there are still good investment opportunities for many companies. Owing mainly to the ongoing increases in demand in the emerging markets, there is a huge need for liquid funds. At the same time, the volatility of operational business and of the financial markets is draining liquid funds in the relevant investment time period.

In this difficult environment, cash management and safeguarding liquidity are increasingly focus areas for management. Prevailing strategic management control mechanisms often only inadequately consider the liquidity situation in terms of the actual management, and the medium- and long-term planning. Four steps have been found to incorporate effective cash management into the overarching management:

1. Create transparency as regards the liquidity situation and identify liquidity drivers.

2. Integrate liquidity management and cash-flow forecast into the planning process.

3. Actively manage operational core processes with a high liquidity impact.

4. Apply liquidity management to make investment possible.


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