Want FREE Templates on Strategy & Transformation? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.







Flevy Management Insights Q&A
What are the key considerations for maintaining positive cash flow and liquidity during a corporate restructuring?


This article provides a detailed response to: What are the key considerations for maintaining positive cash flow and liquidity during a corporate restructuring? For a comprehensive understanding of Restructuring, we also include relevant case studies for further reading and links to Restructuring best practice resources.

TLDR Maintaining positive cash flow and liquidity during corporate restructuring requires Strategic Cash Flow Management, Operational Efficiency, Cost Reduction, and Revenue Enhancement Strategies.

Reading time: 4 minutes


Maintaining positive cash flow and liquidity during a corporate restructuring is critical for the sustainability and future growth of an organization. This process requires meticulous planning, strategic foresight, and a keen understanding of the organization's financial health. The following sections delve into the key considerations that C-level executives must prioritize to ensure financial stability through periods of significant change.

Strategic Cash Flow Management

First and foremost, Strategic Cash Flow Management is paramount. This involves a comprehensive review of the organization's current cash flow status and projections. It's essential to identify the main sources and uses of cash and to distinguish between essential and non-essential expenses. Implementing tighter controls on expenditures can preserve cash. For example, delaying non-critical projects or renegotiating terms with suppliers and creditors can provide immediate relief to cash flow pressures. Moreover, enhancing receivables collection processes and optimizing inventory levels can free up significant amounts of cash.

During restructuring, it's also crucial to maintain an open line of communication with stakeholders, including lenders, investors, and key suppliers. Transparent communication about the organization's financial status and restructuring plans can help in renegotiating terms that may improve liquidity. For instance, securing extended payment terms or additional financing facilities under more favorable conditions can be critical for maintaining operations during restructuring phases.

Real-world examples underscore the importance of strategic cash management. Companies that have successfully navigated restructuring often engage in rigorous cash flow forecasting and scenario planning. This enables them to anticipate cash shortfalls and take proactive measures to mitigate risks. Leveraging technology for better cash flow visibility and control is also a common trait among these organizations.

Learn more about Scenario Planning Cash Flow Management

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Operational Efficiency and Cost Reduction

Operational Efficiency and Cost Reduction are integral to improving cash flow and liquidity. This involves scrutinizing all operational processes and identifying areas where efficiencies can be gained. Streamlining operations can lead to significant cost savings and improved cash flow. For example, adopting lean manufacturing principles or automating manual processes can reduce operational costs and improve margins.

Cost reduction should be approached with a strategic mindset, focusing on long-term sustainability rather than just short-term gains. This may involve making difficult decisions such as workforce restructuring or divesting non-core assets. However, these actions, when carefully planned and executed, can significantly improve the organization's financial health. It's important to conduct a thorough analysis to understand the impact of these decisions on the organization's overall strategy and its stakeholders.

Case studies from leading consulting firms highlight the effectiveness of operational efficiency and cost reduction strategies during restructuring. For instance, companies that have engaged in comprehensive operational reviews often uncover hidden costs or inefficiencies that, once addressed, provide a substantial boost to cash flow. These organizations typically employ a continuous improvement mindset, ensuring that operational efficiency is an ongoing focus rather than a one-time initiative.

Learn more about Continuous Improvement Lean Manufacturing Cost Reduction

Revenue Enhancement Strategies

While cost reduction is crucial, focusing solely on cutting costs can be detrimental in the long run. Therefore, Revenue Enhancement Strategies should also be a key focus. This involves looking for opportunities to increase revenues through new or improved products and services, entering new markets, or optimizing pricing strategies. Innovation plays a critical role in this process, as it can open up new revenue streams and differentiate the organization from its competitors.

Customer retention and acquisition strategies are equally important. Enhancing customer experience and engagement can lead to increased loyalty and higher lifetime value. Additionally, leveraging data analytics to gain insights into customer behavior and preferences can inform more targeted and effective marketing strategies.

Successful examples of revenue enhancement during restructuring often involve a combination of diversification, innovation, and strategic marketing. Organizations that have managed to identify and capitalize on new growth opportunities typically emerge stronger from the restructuring process. These companies not only focus on immediate revenue generation but also on building a robust foundation for future growth.

In conclusion, maintaining positive cash flow and liquidity during a corporate restructuring requires a balanced approach that includes Strategic Cash Flow Management, Operational Efficiency and Cost Reduction, and Revenue Enhancement Strategies. By focusing on these key areas, organizations can navigate the challenges of restructuring, ensuring financial stability and positioning themselves for long-term success.

Learn more about Customer Experience Data Analytics

Best Practices in Restructuring

Here are best practices relevant to Restructuring from the Flevy Marketplace. View all our Restructuring materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Restructuring

Restructuring Case Studies

For a practical understanding of Restructuring, take a look at these case studies.

Operational Excellence Strategy for Regional Hospital in Healthcare

Scenario: A regional hospital is undergoing restructuring to address a 20% increase in patient wait times and a 15% decrease in patient satisfaction scores.

Read Full Case Study

Cloud Integration Strategy for IT Services Firm in North America

Scenario: A prominent IT services firm based in North America is at a crucial juncture requiring a strategic reorganization to address its stagnating growth and declining market share.

Read Full Case Study

Restructuring for a Multi-Billion Dollar Technology Company

Scenario: A multinational technology company, with a diverse portfolio of products and services, is grappling with a bloated organizational structure and inefficiencies.

Read Full Case Study

Organizational Reorganization for E-commerce Retailer in Consumer Electronics

Scenario: The organization in question operates within the highly competitive consumer electronics e-commerce space.

Read Full Case Study

Reorganization Strategy for Defense Contractor in Aerospace Sector

Scenario: The organization is a defense contractor specializing in aerospace technology facing operational challenges due to a recent merger that has doubled its workforce and integrated disparate processes.

Read Full Case Study

Telecom Firm Reorganization for Market Leadership in Broadband Services

Scenario: The organization is a prominent broadband services provider in the telecom sector facing market saturation and increased competition.

Read Full Case Study

Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

In what ways can artificial intelligence and machine learning be leveraged to streamline the reorganization process?
AI and ML can revolutionize business reorganization by enhancing decision-making with predictive analytics, streamlining processes through automation, and facilitating employee engagement and change management, thereby making reorganizations more efficient, data-driven, and adaptable. [Read full explanation]
How is the rise of remote and hybrid work models impacting reorganization strategies?
The rise of remote and hybrid work models is reshaping reorganization strategies, necessitating changes in Organizational Structures, Talent Management, and Operational Efficiency and Innovation, guided by insights from leading consulting firms and market research. [Read full explanation]
What are the implications of blockchain technology on organizational structure and reorganization efforts?
Blockchain technology promotes Decentralization, enhances Collaboration and Innovation, and improves Risk Management and Compliance, driving organizations towards flatter, more agile structures and necessitating new skills and roles. [Read full explanation]
How do you measure the success of a turnaround strategy, and what key performance indicators (KPIs) should companies focus on?
Success of a turnaround strategy is gauged through Financial, Operational, and Market-Driven KPIs like Revenue Growth, Profit Margins, Cash Flow, Inventory Turnover, Customer Satisfaction, and Market Share, aligning with strategic goals for sustainable growth. [Read full explanation]
What impact do emerging technologies like AI and blockchain have on the efficiency and effectiveness of turnaround strategies?
Emerging technologies such as AI and Blockchain significantly enhance Turnaround Strategies by improving efficiency, effectiveness, and stakeholder trust, fundamentally changing corporate restructuring. [Read full explanation]
In what ways can restructuring contribute to a company's sustainability and environmental goals?
Restructuring enhances Sustainability and Environmental Goals through Operational Efficiency, Strategic Planning, and fostering a Culture of Sustainability, aligning with global eco-friendly practices for business resilience and growth. [Read full explanation]

Source: Executive Q&A: Restructuring Questions, Flevy Management Insights, 2024


Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.