Raise The Rate? Cash Doesn't Lie

The Fed raises the rate (again) to combat inflation. This refrain has been happening more often than tuning the piano. Good for your CDs, bad for many businesses? We have received more calls on harvesting cash in the last 30 days than in the last three years. Aside from seeking optimization of SG&A and working capital improvement programs, finance teams are applying the cash is king principle at a fevered pace.

The issue is growth through acquisition, new product growth and customer margin bets, along with Capex / R&D investments have surfaced cracks in platform infrastructure. The cash doesn't lie especially when the earnings / inflation squeeze is applied. Unfortunately, the pressure to take action can put strain on management teams at the same time they are managing year-end compensation, revenue generation initiatives, and the drive for (adjusted) EBITDA.