Economic uncertainty and the liquidity position of companies

Published on 09/04/2025

The world is currently in turbulent times. Conflicts in the Middle East and Ukraine continue, while in the United States a president is in power who is restructuring international trade based on his own vision of economic justice. The result is a global economy under pressure, in which uncertainty seems to be the rule rather than the exception. This instability has a direct impact on business, especially on the liquidity position of companies.

Economic uncertainty arises from a variety of factors, including geopolitical tensions, market volatility, policy changes and unexpected measures such as the recent import tariffs by the US government. Such developments undermine the confidence of both consumers and investors and cause restraint in spending. For companies, this often translates into falling sales, putting pressure on their ability to meet short-term obligations.

Multiple fronts

A deteriorating liquidity position can affect companies on several fronts. Credit risks increase when companies struggle to repay loans, affecting their credit profile and making future financing more difficult. At the same time, companies may feel compelled to delay payments to suppliers, risking supply chain disruption or deteriorating trade relations. Limited cash also leads to investments in growth or innovation being postponed or even cancelled altogether. At the extreme, staffing measures are considered to reduce costs, which in turn has a negative impact on internal dynamics and productivity.

Agility

To meet these challenges, active and forward-looking liquidity management is essential. Companies that regularly analyse their cash flows and plan ahead increase their agility in times of uncertainty. Being cost-conscious without compromising operational strength is crucial here, as is looking for opportunities to diversify revenue sources. In addition, renegotiations with suppliers and lenders can help create financial headroom. Investments in technology and automation, including the deployment of AI, can also help increase efficiency and reduce costs. And that benefits liquidity.

Responding quickly and thoughtfully

While economic uncertainty cannot be completely avoided, companies can guard against its consequences. By strategically managing cash flows, spending and revenue structures, they strengthen their financial resilience. At a time when economic reality can topple overnight, the ability to react quickly and thoughtfully is not a luxury, but a prerequisite for sustainable success. More than ever, stability cannot be taken for granted, but is the result of well-prepared entrepreneurship.

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