Cash flow management isn’t just a survival tactic when times get tough — it’s a discipline you need in both good and bad times. Recent years have shown how quickly the ground can shift: supply chain challenges, economic fluctuations, and post-COVID demand swings have left many manufacturers with inflated inventories and tough decisions about pricing and production.
“These tough decisions actually ignite the need for deeper analysis — not deter it,” advises lead manufacturing advisor at Pinion, Justin Mentele. “Now is not the time you want to guess or decide to just keep doing things in a traditional manner because that’s always worked for you.”
Instead, Mentele recommends focusing on fundamentals — with better data, sharper cost visibility, and smarter forecasting — you can strengthen your operation’s bottom line and maintain resilience, no matter what the market brings.
6 ways to stay cash-conscious and future-ready:
1. Know Your True Costs
Why: Accurate cost tracking — including overhead and indirect costs — is essential to identify which products are profitable and which may be draining resources. You may be tempted to use tariffs as a reason to raise prices, but that doesn’t solve the underlying issue.
How: By breaking down costs at the product level and factoring in overhead, you gain the visibility needed to make smarter pricing, production, and investment decisions.
Result: Understanding true costs then allows leadership to make informed choices that protect cash flow and profitability.
2. Leverage Data for Smarter Decisions
Why: Data is only as powerful as its accuracy. Benchmarking against industry peers is helpful, but unreliable cost allocations make those comparisons meaningless.
“Benchmarking is only good if your information is good to start with,” says Mentele.
How: Invest in systems that accurately capture product costs, allocate overhead fairly, and provide real-time operational insights.
Result: Good data turns into good decisions — whether that’s adjusting pricing, reallocating resources, and identifying products that should be cut.
3. Forecast Demand Carefully
Why: COVID-era supply shortages pushed many buyers to over-order “just in case.” Now, that excess inventory has contributed to a slowdown in new orders.
“From 2022 to early 2024, many manufacturers had some of their best cash years ever,” explains Mentele. “But now we’re seeing the lagging effect of that overbuying, layered on top of an economic downturn.”
How: To protect your cash flow, forecast carefully by blending historical trends with real-time market intelligence. That may mean discounting unusual COVID-era spikes and instead focus on what “normal” demands looks like moving forward. An advisor can help with demand forecasting and planning.
Result: This crucial step manages the impacts of demand fluctuations – from financial planning and inventory management to resource allocation needs and decision-making – you will be able respond to market changes or unexpected events faster and more efficiently than your competitors.
4. Use Downtime to Improve Efficiency
Why: Periods of lower sales can be an opportunity to improve operations.
How: Evaluate workflow, reorganize assembly lines, and identify process inefficiencies to maintain productivity without increasing costs.
“Throughput and efficiency are just as important as your financial metrics,” says Mentele. “If you’re not as busy, use that time to strengthen your shop floor.”
Result: Strategic improvements during lulls help businesses emerge more competitive when demand rebounds.
5. Monitor Overhead and Margins — the Right Way
Why: Keeping a close eye on overhead costs and net profit margins is vital. These are the day-to-day expenses that keep your business running — things like sales and marketing, office rent, management salaries, and insurance.
How: Understand which expenses are fixed versus variable allows you to adjust operations proactively. A financial analysis should include your contribution margin, break-even point, cost structure, and scenario planning.
Result: Regularly reviewing these costs ensures resources are being allocated effectively and supports strategic decisions regarding pricing, investment, and production.
6. Factor in External Pressures
Why: Tariffs and geopolitical unrest can significantly impact your supply chains and cost structures.
In early 2025, the U.S. imposed a 25% tariff on imports from Mexico and Canada and raised tariffs on Chinese goods from 10% to 20%. In retaliation, China added tariffs on key U.S. agricultural products like corn, wheat, and cotton — actions that indirectly raised costs for imported materials such as fertilizers, machinery components, and pesticides. As the tariff landscape continues to shift, agility in planning and operations is essential to staying ahead of these evolving pressures.
How: Rather than viewing these challenges as one-time disruptions, use them as a catalyst to strengthen internal operations. Reassess cost allocations, review supplier relationships, and adjust inventory strategies with flexibility in mind.
Result: By proactively adapting to global changes, you position your business to safeguard cash flow and remain resilient in the face of uncertainty.
Why Strategy Always Wins
Effective cash flow management is the foundation for both day-to-day efficiency and long-term resilience as it lends to the decisions that will outperform reactive or tactical approaches. Following these strategies will help strengthen your bottom line and keep your operation thriving, even in uncertain markets.
Contact a Pinion manufacturing advisor for guidance with cash flow analysis and financial planning.
