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In an era of economic complexity, the conversation around business resilience can no longer afford to ignore the quiet crisis of Trapped Cash. While profitability remains the marquee metric of success, businesses are realizing that liquidity is what truly determines agility.
Liquidity, or the ease with which cash flows through a company, is one of those crucial factors that can prevent the market turmoil from impacting business health in the worst of conditions.
Yet, in boardrooms and treasury offices around the world, a troubling reality persists: a significant portion of enterprise liquidity is unavailable when it is needed most. This is trapped cash – an invisible, self-imposed constraint that can drain growth momentum and inflate financing costs.
The modern CFO must move beyond passive liquidity monitoring to active cash flow orchestration, treating trapped cash not just as an inefficiency but as a strategic obstacle with bigger far-reaching consequences.
Related Brochure: FinnAxia® Global Liquidity Management – Unlocking and Leveraging Trapped Cash for Effective Working Capital Management
Understanding the Nature of Trapped Cash
Trapped cash is not just about money that is physically stuck in a bank account; it is broader, deeper, and more systemic. It refers to liquidity that exists within a business but cannot be accessed or deployed effectively due to operational, regulatory, structural, or behavioural frictions.
The origins of trapped cash, in any organisation, is often in the invisible corners of financial operations, such as:
- Subsidiaries with surplus funds that can’t be centralized.
- Long receivables cycles left unmonitored.
- Absence of cash visibility across multiple banking partners.
- Fragmented ERP, treasury, and banking systems.
The business may look solvent on paper, but its actual cash flow mobility might be severely impaired.
Related Brochure: FinnAxia® Global Receivables – Enabling Savings and Efficiency Gains Through Smarter Collections
This challenge is magnified in multinational organizations, where cash is scattered across jurisdictions with capital controls, or in companies lacking centralized treasury governance.
The Strategic Risks of Inaccessible Liquidity
Cash that cannot be mobilized as needed can quickly become a liability. At the operational level, it leads to delayed vendor payments, expensive overdrafts, or forced debt that companies borrow despite having money “somewhere”.
At the strategic level, with a higher cost of capital, it slows down investments in innovation, acquisition, and expansion. At this stage, the organization becomes reactive, unable to pursue opportunities in time because cash readiness is unreliable.
What’s more dangerous is that trapped cash never gets visible on traditional dashboards. It is not flagged unless a crisis exposes the liquidity gap. By then, the cost has already been incurred in terms of lost deals, broken supply chains, or diminished shareholder trust.
Cash Flow Optimisation: A Shift in Philosophy
Addressing the possibility of trapped cash is not a one-time project. It requires a shift in how liquidity is perceived. Companies must stop viewing cash flow as a narrow treasury concern and start recognizing it as a strategic enterprise function that spreads across procurement, sales, finance, IT, and operations.
This means redesigning the cash lifecycle with three objectives in mind:
- Visibility – gaining real-time insights into where cash sits and how it moves across the enterprise.
- Control – orchestrating decisions that accelerate inflows, defer outflows, and manage currency risks proactively.
- Mobility – enabling the smooth movement of funds between entities, geographies, and banking partners.
This reorientation can turn cash from a static asset into the key to agility, which a CFO can use to respond to crises, fund innovation, and improve valuation.
Related Read: Revolutionizing Corporate Cash Management in the Digital Age
Unlocking Liquidity: How Modern Finance Teams Are Doing It?
The organizations leading the way in cash flow optimisation are investing in three strategic capabilities:
- Technology-led Visibility: They use API-based dashboards that connect treasury systems with banks, ERPs, and forecasting tools to provide a single, unified view of cash.
- Receivables Intelligence: They deploy AI to prioritize collections, predict delinquencies, and automate reconciliation, shortening the working capital cycle without harming customer relationships.
- Treasury Centralization: Through virtual accounts, netting, and in-house banking, they pool cash intelligently across entities to reduce external debt reliance.
- Scenario Planning: CFOs use liquidity simulations to model responses to market shocks and optimize working capital buffers.
- Open Banking and Real-time Payments: Enabling faster interbank settlements, reducing friction, and enhancing liquidity mobility.
These firms are also increasingly incorporating scenario-based liquidity modelling and asking “what if” questions to simulate the impact of market shocks on their cash positions before they occur.
This impact is measurable. According to PwC, addressing excess working capital would lift overall ROIC by up to 30bps (basis points).
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Trapped Cash in Context: A Market-Wide Problem
Deloitte’s Global Corporate Treasury Survey 2024 highlights that Visibility into global operations, cash, and financial risk exposures continues to be the most challenging with 58% decision makers as respondents. And another PwC survey concluded that over 25% global cash is not visible to Corporate treasury on a daily basis.
In emerging markets, this problem becomes further augmented by regulatory constraints and banking infrastructure limitations. In sectors like manufacturing and retail, the cyclical nature of revenues and inventories makes cash management even more critical. Yet the tools and practices remain outdated.
From Cash Management to Liquidity Strategy
Optimising cash flow is not about being conservative with capital but, about making capital work harder. For CFOs, this means investing in technologies that reduce time-to-cash, engaging cross-functional teams in liquidity planning, and shifting treasury from a reporting function to a business enabler.
Most importantly, it means asking:
- Where is our cash today, and why can’t we move it freely?
- What assumptions are we making about liquidity that may no longer be valid?
- What is the true cost of inaccessibility and not just in interest or penalties, but in missed opportunity?
Making Liquidity Count
The world’s most resilient businesses are not the ones that hold the most cash, but the ones that can move cash the fastest and use it the smartest.
Trapped cash is a drain not just on operations but on potential. Optimising cash flow is no longer a tactical fix – it is a strategic mandate for businesses looking to thrive in uncertainty.
For today’s CFOs, the challenge is no longer how much capital you can raise. It’s how much of your own you can release. And the answer lies not in your balance sheet, but in the orchestration of cash flow across the enterprise.
