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Cash and liquidity management (including cash forecasting)

Robust and sustainable management of cash and working capital can increase stakeholders’ confidence in a business. Improving cash flow in order to reduce debt, fund growth or provide a better return to stakeholders is key to any business, especially during periods of economic uncertainty.

To find out more about managing cash flow in a COVID-19 environment, please click here.

If you would like to learn more about managing cash in the 'New Reality' economy please download our e-book here.

Our methodology

We support our clients with the following cash optimisation issues:

  • Identifying priority initiatives which can improve immediate and long-term liquidity.
  • Introducing processes to help to ensure better visibility over working capital and cash flows.
  • Help enforce controls over cash procedures in order to conserve cash.
  • Introducing KPIs which can demonstrate the effectiveness of management initiatives.

Our methodology and approach is adaptable for businesses at all scales and operating in all sectors – our approach is tailored to client-specific circumstances.

Data-driven decision making

Our clients have increasing amounts of financial and operational data at their disposal. Many, however, experience practical challenges securely processing, interpreting and gaining meaningful insight from it.

KPMG has developed a suite of market-leading analysis and visualisation tools that securely analyse your data and can drive valuable and unexpected conclusions.

Our approach is comprehensive and effective.

Our approach

Why KPMG?

  • Track record: We have successfully supported a range of clients
  • Experience: Our team works across a range of geographies and sectors
  • Practical Options: We combine our analysis with practical options to support risk management and mitigation strategies

 

Insights

Cash forecasting visibility, and control over preservation and generation levers, has never been as important. Since COVID, we have worked hard to help clients build or restore faith in the processes and tools they have to manage cash flow tightly.

Kenny McKay, Restructuring Partner

Working capital optimisation

Working capital is increasingly a top three priority for businesses; leading practitioners are consistently applying a cash lens to support complex transformation and growth programmes which provides the opportunity to self-fund change.

We believe there are typically cash opportunities of between 1-15% of gross working capital value in most businesses and the benefits of realising this can be far reaching.

The benefits of liquidity

What we do

As outlined above, our working capital capabilities form a component part of a wider cash and liquidity management framework that has been established for well over a decade now.

Our approach to working capital typically involves a rapid diagnostic followed by implementation, with ‘quick wins’ fast tracked and longer-term initiatives planned and actioned on a sustainable basis, working collaboratively with Management.

Rapid diagnostic implementation

KPMG’s leading working capital diagnostic methodology utilises proprietary data analytics visualisation tools. Drawing from multiple, standard, ERP data outputs our software is able to quickly analyse and prioritise working capital enhancement opportunities.

Why KPMG?

  • Small Teams: we use small, highly experienced teams.
  • Technology: we have some of the market leading technology.
  • Valued based fees: we are flexible with fees and seek to link with return on investment.
  • Track record: we have a tested methodology and work with companies across a range of sectors.

 

Insights


Crisis cash management

Cash management is critical for stressed and distressed companies that have limited choices and need to preserve cash to buy time to restructure and/or refinance. Our crisis cash work allows longer-term solutions, such as refinancing or CVAs, to be developed and enacted.

What we do

Once we have established the business position, we can start stabilising and addressing a critical liquidity outage by:

  • Improving visibility of funding requirements through development and implementation of robust short term cash flow forecasts.
  • Identifying and implementing short term cash generation/preservation initiatives. 
  • Introducing tighter controls over cash related procedures and introducing cash related KPIs.
  • Advising on short term tactical liquidity strategies. 
  • Supporting clients in managing communication and interaction with relevant stakeholders.
  • Rebuilding trust with stakeholders to support a more sustainable restructuring solution.
  • Rapidly exploring alternative financing options with investors/financiers.
     

Why KPMG?

Our team can support across a range of crisis cash situations, including when organisations are:

  • In breach of or imminent breach of banking facilities and/or covenants.
  • Struggling to meet short term funding requirements and making unexpected requests for additional funding.
  • Being forced to micro-manage cash/defer payments. 
  • Receiving more requests from customers to extend credit terms when cash is already tight. 
  • Forecasting covenant breaches which may require short term liquidity management to avert.