Trade war: How to Protect Cash Flow in Uncertain Times

In today’s volatile economy, cash flow management is no longer just a back-office task—it’s a strategic priority for protecting financial strength, agility, and long-term resilience.

This article summarizes expert strategies from a recent webinar designed to help U.S. businesses safeguard liquidity in the face of economic and geopolitical uncertainty. The insights are based on the real-world experience of Maxime Pichol, a seasoned finance leader with over 15 years of experience navigating major disruptions, including the COVID-19 pandemic and global trade tensions.

Want to dive deeper into the strategies shared in the webinar? Watch the full recording to explore insights on how to protect your cash flow in today’s volatile market.

What’s Driving Today’s Economic Volatility?

The renewed U.S.-China trade war in 2025 has triggered a wave of economic uncertainty, starting with tariffs of up to 130% on Chinese imports, followed by U.S. export restrictions on advanced semiconductors from leading American tech companies.

While the U.S. administration initially delayed broader tariff increases on other trading partners to protect the domestic economy, it doubled down on tariffs against China—pushing rates as high as 145%. This move has intensified supply chain pressures, increased production costs for U.S. businesses, and raised concerns about a potential recession.

This escalation has already triggered a wave of economic repercussions—not only in the U.S. but globally. China’s manufacturing sector, for instance, is showing signs of contraction, with April’s factory activity expected to slip into negative territory (Reuters – China factory activity forecast). This creates additional uncertainty for U.S. businesses that depend on Chinese suppliers for raw materials, components, or finished goods.

Meanwhile, U.S. small and mid-sized businesses are feeling the squeeze, facing rising costs and weakening demand (Reuters – Small businesses signaling trouble).

On May 12, 2025, the United States and China announced a temporary suspension of certain tariffs for a period of 90 days, while trade negotiations between the two countries will continue. At the time of publication, this is the latest information available.

In parallel, the U.S. has urged allies like Japan, the Netherlands, and South Korea to curb exports to China, prompting retaliatory measures from Beijing, including export controls on critical materials like gallium and germanium—used in electronics and clean tech manufacturing.

The ripple effects include:

• Currency volatility, as the U.S. dollar shows signs of weakening amid global uncertainty.
• Unstable interest rates, making credit access more difficult and raising liquidity costs for businesses.
• Lower growth expectations, with the OECD now forecasting global GDP growth of 3.1% for 2025 (down from 3.3%), and the U.S. economy shrinking by 0.3% in Q1, according to the U.S. Bureau of Economic Analysis.
• A slowdown in global trade, with the WTO predicting a potential contraction of up to 1.5%, compared to earlier projections of 3% growth before the escalation.

One clear indicator of market stress is the VIX Index, which measures stock market volatility. Recent tariff announcements triggered the third-highest spike in VIX readings in the past 20 years—surpassed only by the COVID-19 pandemic and the 2008 financial crisis.

How to Build Robust Scenarios

In today’s volatile economy, scenario planning is no longer just a tactical exercise or an annual budgeting ritual. It has become a strategic discipline that empowers U.S. finance leaders to model uncertainty, assess the financial impact of key business decisions, and maintain resilience under pressure.

The process starts with building a strong baseline—typically a 12-month cash flow forecast with monthly granularity. Even if your business lacks advanced financial models, you can leverage historical data from the past 12–24 months to map seasonality, tax payments, and customer payment cycles. This baseline represents your business-as-usual scenario, assuming no major external shocks.

From there, companies should develop at least two alternative scenarios:

• A moderately adverse scenario (for example, a 20% drop in revenue),
• A worst-case scenario (such as operating at minimum capacity, similar to pandemic-era lockdowns).

These simulations help test the feasibility of strategic moves like exiting a market, acquiring a competitor, or deferring capital expenditures. They also strengthen your position when negotiating with lenders or investors—especially if you’re seeking to justify risk-mitigation measures like SBA-backed loans, expanded credit lines, or additional liquidity reserves.

If you’re building these scenarios in Excel, you’ll likely run into limitations—particularly when trying to manage multiple, dynamic scenarios in parallel. That’s why we recommend selecting one stress-tested scenario as your new baseline for ongoing updates. This should become your single source of truth, regularly maintained to reflect changing market conditions.

However, don’t discard your other models. Keep them organized and easily accessible, so you can quickly revisit and refine them if conditions shift and one of your alternative scenarios becomes more likely.

If you’re using Agicap, you can go even further — easily creating and managing multiple dynamic scenarios in parallel. You can layer them together and instantly visualize the impact of changing assumptions on your cash flow forecasts and key performance indicators.

How to Monitor Scenarios in Real Time

While scenario planning provides the structure, real-time monitoring ensures that those scenarios stay relevant as market conditions evolve. Without frequent updates, even the most advanced models quickly become outdated.

To keep your scenario planning effective, U.S. finance teams should focus on early warning signals — leading indicators that help predict potential disruptions to cash flow, margins, or operational stability. Key examples include:

• Weekly order volumes in your most important U.S. or international markets,
• Shifts in forward exchange rates (e.g., USD/EUR),
• Changes in Days Sales Outstanding (DSO),
• Price spikes in raw materials, shipping, or logistics costs.

By tracking these metrics, your team can spot deviations from your baseline assumptions early and take action before small issues turn into major problems. For example, a sudden increase in DSO might require a short-term funding review or a change in your receivables collection strategy.

Agicap helps finance teams stay ahead by enabling real-time data capture and dynamic scenario management. You can adjust key variables once and instantly apply those changes across all your simulations—reducing manual errors and improving decision-making agility, especially in volatile market conditions.

Finally, don’t underestimate low-probability but high-impact risks. While rare, black swan events like sudden regulatory changes, major customer defaults, or critical supplier failures can disrupt your entire liquidity position. That’s why it’s essential to proactively model these risks and develop response playbooks—combining financial stress testing with operational contingency plans.

Strengthening Receivables Management: an Often Overlooked Lever

Improving your collections process is one of the fastest and most effective ways to strengthen cash flow — especially in volatile market conditions. Yet many U.S. businesses still rely on outdated, manual methods that leave too much room for delays, errors, and missed opportunities.

Here are the key steps your company can take to modernize and streamline receivables management, based on insights shared in our recent webinar:

Why Collections Matter More Than Ever

Even the best scenario planning can fall apart if your receivables performance isn’t strong. In times of economic uncertainty, late payments become more common — putting additional pressure on your working capital.

For example, an Agicap survey found that by the end of 2024, 58% of CFOs in the U.K. reported a significant increase in Days Sales Outstanding (DSO) — a trend that continues to affect businesses worldwide, including in the U.S., as geopolitical and economic tensions escalate.

One real-world example shared during the webinar brings this issue to life:

A company generating around $165 million in annual revenue was still managing collections manually — with just one part-time employee and no digital tools. Their follow-up process was inconsistent, subjective, and entirely paper-based. The result?

• Rising DSO,
• Increased reliance on invoice financing (also known as factoring),
• Growing pressure on cash flow and liquidity — despite maintaining healthy profit margins.

Best Practices to Build a Scalable, Professional Collections Process

1. Automate Reminders and Follow-Ups

Replace manual, ad-hoc outreach with automated workflows that adjust to customer profiles — based on balance due, length of delay, and payment history.

For example, Agicap users have tripled their chances of collecting within 60 days of the due date by using structured dunning automation. AI-powered tools can also assist with message drafting to ensure the right tone and timing for each customer interaction.

2. Shift the Effort Before the Due Date

Research shows that 70% of successful collections happen before invoices are technically overdue. That’s the most critical window to act:

• Send proactive reminders 5–10 days before the due date,
• Include direct payment links in your emails,
• Provide customers with self-service access to all open invoices through a dedicated online portal.

3. Clarify Ownership and Define KPIs

Avoid internal conflicts by clearly separating sales and collections responsibilities. Set measurable KPIs to track performance, such as:

• Days Sales Outstanding (DSO),
• % of overdue invoices,
• Response rates to follow-ups,
• Recovery performance by customer segment or aging bucket.

4. Segment Your Efforts and Set Priorities

Not all receivables carry the same risk. Focus your recovery efforts where the stakes are higher:

• Strategic customers or invoices overdue by more than 60 days,
• Use risk scoring and payment behavior analysis to tailor your collection strategy.

5. Make Collections Part of Scenario Planning

Late payments don’t just impact cash flow—they also distort financial forecasts. That’s why it’s essential to:

• Incorporate DSO and overdue trends into your cash flow scenarios,
• Flag early signs of payment delays,
• Notify your treasury or finance team to proactively adjust credit lines or payment terms when needed.

From Admin Task to Strategic Lever

Collections shouldn’t be treated as just another back-office task. When managed proactively, your receivables become a strategic lever to stabilize cash flow and reduce reliance on external financing.

In volatile markets, neglecting your collections process can significantly increase working capital requirements—and the financial pressure that comes with it.

Want to accelerate your cash flow and reduce DSO? Download our free ebook to discover proven strategies for optimizing collections, automating follow-ups, and improving your company’s cash position.

Reducing Extra Spend: Policy, Control, and Visibility

In today’s uncertain economic climate, unplanned or discretionary spending can easily derail even the most well-constructed financial plans.

One real-world example, shared during our recent webinar, illustrates the risk of vague cost-control measures:

A company announced a “soft” spending freeze, asking managers to “cut expenses” without providing clear guidelines or enforcement mechanisms. The result?

• Some teams completely shut down key activities such as employee engagement programs and team events,
• Others worked around approval policies by breaking larger purchases into smaller transactions to stay below CFO approval thresholds.

This example underscores the importance of implementing clear spending policies, effective approval workflows, dedicated tools, and a company-wide culture of accountability to manage costs consistently—especially in volatile market conditions.

Best Practices to Reduce Rogue Spending

1. Establish Clear and Company-Wide Spending Policies

Clearly define what types of expenses are frozen, allowed, and the approval thresholds for each category.

Explain the reason behind these policies — for example, protecting cash flow to avoid layoffs or additional debt—and tie them to your company’s values to promote accountability across all teams.

2. Implement Multi-Level Approval Workflows

Create standardized approval processes based on spending thresholds. For example:

• Expenses under $500 require team lead approval,
• Expenses from $500 to $2,000 require manager approval,
• Expenses over $2,000 require CFO approval.

Apply these workflows consistently across all departments to reduce loopholes and prevent workarounds like split purchases. Consider adding automatic blocks when budgets are exceeded or when spending is out of policy.

3. Leverage Proactive Spend Management Tools

Use tools like Agicap to set budgets by department, team, or project, and enable real-time alerts for budget overruns or pending approvals.

Consider smart corporate cards with user-specific and category-specific spending limits to control day-to-day expenses more effectively.

4. Track Performance and Communicate Regularly

Create monthly dashboards with key spend metrics, such as:

• Percentage of overspending,
• Number of exceptions,
• Volume of out-of-policy purchases.

Recognize teams that perform well and share internal best practices to drive improvement across the organization. Track not only visible overruns but also attempts to bypass rules, such as splitting purchases into smaller transactions.

5. Link Spending Controls to Scenario Planning

Use scenario planning to model the impact of targeted budget cuts in areas like marketing, hiring, travel, and events.

Analyze how these cuts affect both cash flow and your profit and loss (P&L) in the short and medium term. This strengthens the connection between authorized spending and financial sustainability, even in challenging economic environments.

Why Adopting Advanced Spend Management Tools Is No Longer Optional

Relying on manual processes significantly increases the risk of untracked or unauthorized spending. And with AI making it easier than ever to manipulate or falsify receipts, the need for automated verification and audit-proof spend control has never been more urgent.

Tools like Agicap offer built-in document verification features to help finance teams validate expenses before they impact your budget or cash flow.

The bottom line?

Effective spend management starts with shifting your company’s culture—treating it as a strategic priority, not just an administrative task.

Only then can you build a resilient financial governance framework that protects your company’s financial health.

Ready to take control of your company’s spending?

Learn how Agicap helps U.S. finance teams track, validate, and manage expenses in real time — ensuring budget compliance and protecting cash flow. Explore the features.

Conclusion: Resilience Starts with Liquidity

In an era of constant volatility—driven by trade tensions, supply disruptions, and financial uncertainty—static forecasts and EBITDA-focused decisions fall short. Liquidity must become the cornerstone of financial strategy.

Scenario planning, automated collections, and proactive cost control are essential to protect cash and build resilience. But they require updated data, collaboration, and the right tools.

Agicap brings all of this into one platform—empowering finance teams with real-time visibility and the agility to respond quickly, even in uncertain times.

Curious how Agicap can help you protect liquidity in uncertain times?

Start your free trial and discover how to streamline scenario planning, receivables, spend control, and real-time cash flow visibility—all in one platform.