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In this two-part article series, we examine how Chief Financial Officers (CFOs) can adapt their financing structures to remain resilient and competitive in disruptive times. In our first article, we explored external financing sources and the trend toward more diversified and innovative instruments. Now, we turn to the second, and often underestimated pillar: internal financing.
Refinancing faces increasingly strong headwinds. Higher interest rates, tighter covenants, and shorter maturities are making traditional bank debt less accessible and significantly more expensive (see also our recent DACH debt report, Approaching the maturity wall – Debt refinancing pressures in DACH). While innovative instruments such as working capital solutions, sale-and-lease-back structures, and asset-backed financing are gaining relevance, and private debt is debated as a structural alternative rather than a passing trend, one reality is clear: external capital is no longer cheap, abundant, or flexible by default. In parallel, active covenant and liquidity management — through proactive bank negotiations and scenario-based planning — have become a core CFO discipline. Against this backdrop, unlocking capital from within the business moves from a secondary optimization exercise to a strategic necessity.
The current state of internal capital
Many organizations still operate with a capital structure designed for a low-interest environment. Today’s restrictive and expensive debt increases the urgency to reduce internal capital needs and free up liquidity from within the business. However, employed capital — particularly working capital — has traditionally received far less management attention than P&L metrics. Capital efficiency is often seen as a technical finance topic rather than a shared operational responsibility.
As a result, initiatives to release internal capital frequently face internal push-back. Business units may perceive them as bureaucratic, short-term, or even value-destructive. Without clear sponsorship and a compelling narrative, capital release measures are often deprioritized in favor of growth or margin initiatives, even when high financing costs are eroding profitability.
Shifting market expectations
This mindset is changing. Across industries, key performance indicators are evolving from a pure focus on profitability toward metrics like return on capital employed (ROCE). Investors, lenders, and boards increasingly assess management quality by its ability to allocate and recycle capital efficiently, not just by delivering EBITDA growth.
At the same time, the composition of the cost base is shifting. Financing costs are no longer negligible; they are becoming a visible and structural burden on the business. This reality forces tougher negotiations with suppliers and customers over payment terms, prepayments, and inventory ownership. Financing considerations are moving into procurement, sales, and supply chain decisions — whether organizations are ready or not.
What CFOs should do now
Successful internal financing programs share common characteristics. To build a more resilient financial foundation, CFOs should focus on a few key areas.
- Empower a dedicated, cross-functional team. Capital efficiency cannot be delegated to finance alone; it requires operational ownership backed by authority. Successful programs rely on dedicated, cross-functional teams that are explicitly empowered by top management, ensuring that working capital management is integrated into daily operations and strategic planning.
- Drive decisions with data, not myths. Assumptions about “unavoidable” inventories, “industry-standard” payment terms, or “unmovable” customer expectations often collapse under rigorous analysis. A data-driven approach can uncover significant opportunities that were previously hidden by longstanding assumptions.
- Change the narrative. Working capital initiatives should be positioned as a positive contribution to the company’s resilience, strategic flexibility, and competitiveness — not as austerity measures — to build broad support and momentum.
- Centralize and forecast liquidity. Finally, liquidity must be managed centrally. Implementing efficient cash pool structures, combined with a robust cash flow forecast, reduces the need for local cash buffers, improves transparency, and lowers total working capital requirements.
In a volatile environment, internal financing is not just a lever to pull; it is a prerequisite for strategic freedom and sustainable success.
Learn more about external financing in our first article:
