The quest for liquidity

16 de November de 2011

The global economic crisis has impacted the Brazilian economy. The flight of foreign capital for investments, the greater restriction to credit, lower exports and significant drop in domestic purchases are the direct product of that reality. Amidst this scenario fraught with pessimistic forecasts for the economy in the short and medium terms, liquidity arises as one of the main weapons corporations can wield to survive these tough times. Liquid companies will always have the upper hand when negotiating with suppliers and clients, besides having more leverage to close deals.

Therefore, liquidity is the key for companies to keep their business running, that is, for them to be able to buy raw materials, pay salaries and other charges, to ensure some financial security – and also to invest. In view of that reality, the challenge is to keep their resources within the companies, postponing expenses and advancing income.
“Today we see that the globalization is closer to our doorstep than we used to think. The lack of liquidity stiffens the entire economy, leading to stagnation or recession due to a drop in economic activity”, said Jefté Fernando Lisowski, Coordinating Director for Pactum Consultoria at their Florianópolis unit. Consequently, the corporate environment is taken over by the idea of improving processes and financial management, reviewing short- and medium-term strategies, and resizing business plans. All that to strengthen the company and ensure the necessary working capital.

However, in practice, how do we capitalize our companies? At a time of crisis, making use of all alternatives is a valid choice. Some of the measures suggested include reviewing prices and contracts, decreasing wastefulness, working on collections by way of negotiations to ensure receipts and greater security in sales, securing the inflow of resources deriving from overdue credits, optimizing tax resources by no longer paying questionable installments, reassessing labor expenses, and others. In other words, it is essential to also use the legal-corporate tools available and act on all fronts at the same time, for instance, on taxes, finance, labor and manufacturing.