Working capital and liquidity management are the lifeblood of any organization, ensuring that day-to-day operations run smoothly while supporting long-term financial stability. Efficient management enables transparent and measurable effects on both operational and financial KPIs, such as cash conversion cycles and debt ratios, which are critical for decision-making. With rising costs of capital, liquidity management has become a top priority for many CFOs, underscoring its role as a strategic lever in preserving organizational health. Inefficient processes signal gaps in operational and financial data integration and communication, which must be urgently addressed to avoid cascading issues. Poor liquidity management increases financial costs, creates funding challenges, and heightens the risk of credit rating downgrades, potentially eroding stakeholder confidence. A well-structured approach to liquidity management ensures resilience, mitigates risk, and supports growth in an increasingly volatile economic environment.
Inter-Company Funding
Inter-company funding plays a vital role in optimizing working capital and liquidity management by leveraging internal resources to meet cash flow needs across entities. Best practices include aligning funding strategies with global cash flow forecasts, ensuring compliance with transfer pricing regulations, and mitigating currency risk. Our firm has often observed that using local foreign exchange exposure to reduce funding costs can unintentionally lead to significant FX losses, particularly in emerging markets.
In post-M&A scenarios, integrating inter-company funding structures has proven to yield substantial benefits, such as cost savings, natural balance sheet offsets, and enhanced working capital efficiency. Our expertise in this area has helped firms streamline funding mechanisms while minimizing risks associated with currency volatility and mismatches. Effective inter-company funding strategies enhance liquidity, reduce external borrowing costs, and align capital usage with corporate objectives.
Cash-Pooling and Technology
Optimal cash-pooling structures are critical for managing working capital and liquidity, particularly for businesses with multiple currencies and geographical operations. Best practices involve implementing centralized or notional pooling systems to streamline fund utilization, reduce transaction costs, and mitigate currency risks. Our firm specializes in designing and applying these structures, leveraging AI-driven tools to analyze cash flows, forecast liquidity needs, and optimize fund allocation.
This type of study is a core offering of our firm; however, any tax or regulatory implications must always be discussed and confirmed by your tax experts and legal teams. It is especially important to ensure compliance in regulated markets, where pooling arrangements may face additional scrutiny. With the right approach, businesses can achieve robust liquidity management, enhanced financial flexibility, and alignment with global operational goals.
On vs. Off-Shore Financing
On-shore and off-shore financing are vital in managing working capital and liquidity, each offering distinct advantages based on the company’s operational needs and geographic presence. Best-in-class practices involve carefully weighing the cost savings of offshore solutions against the balance sheet and regulatory risks, including potential tax implications and currency volatility. For developed markets, sourcing the most cost-effective funding strategy is crucial, with a focus on applying the most relevant tools to achieve the cheapest funding profile. A core example is utilizing EUR/USD basis swaps, which allow companies to capture the most effective cost when converting into local funding needs.
While off-shore financing can offer significant liquidity advantages, it requires diligent oversight of cross-border regulations and tax laws. Our firm helps clients strike the right balance between cost savings and risk management, ensuring compliance with both local and international frameworks while optimizing their funding strategies.
However, any tax or regulatory implications must always be discussed and confirmed by your tax experts and legal teams.
I am pleased to recommend Erik. During our time working together, Erik expertly transitioned complex projects from planning to successful execution, showing a keen ability to manage both strategic initiatives and detailed financial analyses. His proactive approach in identifying potential risks and developing mitigation strategies greatly benefited our team and our clients.
Joakim Lidbark
Former Global Head of CitiFX Client Solutions
I had the pleasure of working with Erik on several high-level CFO and board projects, spanning capital risk, foreign exchange, global policy, and treasury transformation . His depth of knowledge and keen understanding of corporate priorities are unmatched. Erik’s forward-thinking approach to potential risks, coupled with his adaptability to industry and company-specific nuances, sets him apart. He is also an outstanding communicator, able to connect effectively at all levels of an organization.
Nick Pedersen,
Global Head of Digital – NatWest
I have known and collaborated with Erik Johnson for over 25 years, beginning with our roles as regional treasury heads at Siemens—Erik in Hong Kong and myself in New York. Together, we were responsible for designing, streamlining, and implementing customized processes and protocols aimed at clarifying and managing complex corporate risk profiles across various asset classes, including interest rates, foreign exchange, credit, and commodities. This work ensured alignment with company objectives and risk management practices. Over the years, we have frequently partnered on global hedging strategies for corporate clients. Erik has dedicated his career to advancing the field of treasury risk management, demonstrating an exceptional commitment to deep understanding, integrity, and high professional standards.
Mark Cipollina,
Former CFO Siemens Capital U.S.
I have collaborated with Erik on multiple global risk management C-suite initiatives over many years with several different corporates. His extensive experience as a corporate treasurer provided him with a deep understanding of our needs across various operational areas. Erik delivered a comprehensive policy and risk management framework that aligned with our objectives, while adhering to industry best-in-class practices. His proactive and strategic approach to identifying and addressing risks, combined with his forward-looking insight and ability to embed technology into both current and future needs, sets him apart. I highly recommend him.
Ciaran Fegan, CFA
Senior Director, FX Risk Management & Treasury Strategic Projects at Viatris
I have had the privilege of knowing Erik for nearly 30 years. During this time, and in my previous capacity as the head of foreign exchange trading at leading global financial institutions in the Asia-Pacific region, I have been consistently impressed by Erik’s extensive experience in global risk management and his deep understanding of financial markets across multiple asset classes. Erik displays a disciplined approach to risk management, spanning both emerging and developed markets, and stands out as an industry leader. His strong grasp of macroeconomic themes and expertise in financial risk modeling, allow him to translate complex data into practical, effective risk management solutions that consistently deliver value for his firm and their clients. I am confident in recommending Erik for roles requiring strong leadership, strategic vision, and deep expertise in financial markets and risk management.
Christopher de la Hoyde
Former Head of Foreign Exchange Asia Pacific at RBS
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