Budgeting for 2026: Why CFOs Must Put Cash Management and Process Improvement First

CFOs planning 2026 budgets must prioritize process improvement in cash management. Learn where to cut, where to invest, and how to boost liquidity.

As we enter Q4, CFOs are setting 2026 budget priorities, and the common theme across industries is clear: the most resilient companies are those embedding process improvement in finance.

Why? Because with interest rates still elevated and debt costly, cash management is no longer just about controlling numbers—it’s about improving the processes behind them. For portfolio companies with private equity leverage, this focus is even more urgent.

Process Improvement Priorities for 2026 Budgeting

Streamline Inventory Management Processes
The “safety stock” built up during past supply chain disruptions continues to tie up working capital. In 2026, CFOs should lead inventory management process improvements – better forecasting, tighter demand planning, and closer supplier collaboration—to free up cash without exposing the business to risk.

Strengthen Accounts Receivable (AR) Processes
Delays in cash inflows often stem from weak processes, not customer resistance. Invoices sent late, errors in billing, or inconsistent collections create avoidable gaps. Budget for AR process improvement with automation, disciplined billing cycles, and root-cause analysis of late payments to accelerate cash conversion.

Optimize Accounts Payable (AP) Processes
Liquidity depends on how and when cash leaves the business. CFOs should ensure AP teams are aligned with cash flow needs by enforcing terms, avoiding early disbursements, and negotiating flexibility. Investing in AP process improvement means better alignment of supplier payments with inflows.

Working Capital Optimization: What to Cut vs. Where to Invest

With a process-improvement lens, 2026 budgets should focus on clear trade-offs:

Cut / Scale Back:

  • Carrying costs from excess inventory
  • Early supplier payments draining liquidity
  • Low-value initiatives that tie up working capital


Invest / Prioritize:

  • AR/AP automation tools that streamline finance processes
  • Inventory forecasting and demand-driven planning
  • Supplier collaboration programs for long-term resilience


The CFO Leadership Imperative for 2026

For CFOs, process improvement in finance is no longer optional, it’s a strategic imperative. By focusing on AR, AP, and inventory workflows, finance leaders can free up cash, reduce risk, and create agility for growth.

The CFOs who embed continuous process improvement into their 2026 budgets will not only safeguard liquidity but also build a competitive advantage for the year ahead.

 

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