Private equity is navigating the toughest liquidity conditions since the GFC. High-for-longer interest rates, tighter bank covenants, cautious credit committees and capital markets that haven't fully reopened are putting pressure on every part of the PE operating model.
Across the portfolio businesses I work with the CFO themes are consistent:
When the cost of capital rises this sharply, the maths stops being theoretical and becomes operational. Interest cover tightens, covenant headroom narrows, and inefficiencies that once felt manageable start carrying real balance sheet risk. Proactive CFOs aren't waiting for conditions to normalise or capital markets to open back up. They're engineering additional capacity inside their own businesses because...
...the cheapest capital available in 2026 isn't external funding. It's the cash already sitting on their balance sheets.
In a high rate environment, disciplined working capital management does three things: it strengthens interest cover, protects covenant headroom and reduces reliance on expensive external funding. When you can demonstrate that discipline and it's backed by clear benchmarks and governance, the tone of lender conversations shifts from scrutiny to respect. In this market, that shift is a strategic advantage in its own right.
Across the portfolios I work with, four levers consistently unlock meaningful internal liquidity.
This is where the real cash sits. Visibility isn't usually the problem, consistent control is. I routinely see receivables stretch by 8–15 days across mid-market portfolios, not because customers won't pay, but because no one truly owns DSO across sales, operations and finance. Inventory creeps as forecasting discipline softens and payment terms drift when teams are reacting rather than negotiating. A structured working capital review is often worth more than a revenue project.
This lever matters most in businesses that have grown through acquisition and are running across fragmented systems with AP workflows patched together. Manual touchpoints slow cash conversion, inflate labour costs and create errors that ripple downstream. Automation delivers direct working capital upside: better accrual accuracy, fewer disputes, faster approvals and cleaner audit trails.
Poor treasury discipline is expensive at the best of times. In a high rate environment, it's a liability. When cash isn't centralised, visibility drops, and so does your negotiating leverage with banks. Modern TMS tools give CFOs real-time clarity across liquidity, FX exposure and debt servicing risk. That strengthens both your internal decision making and external credibility.
Most CFOs I work with believe they have strong cost control because their category level spend reports look stable, predictable and under control. The problem is that leakages, price creep, maverick spend and spec drift don't show up at the category level. They're only visible when you go to the line item. These costs compound quietly with small pricing variances accumulating into significant EBITDA erosion - and it's far more common than most finance teams realise.
No matter the business type, I consistently see line item level analysis identify 3–8% of recoverable spend that can be converted into immediate cash and margin improvement.
In one aged care portfolio business we partnered with, line item analysis revealed double digit price variance on standard consumables that had been completely masked by aggregated reporting. The opportunity to defend margin and improve covenant resilience was sitting there the whole time, it just hadn't been visible.
When you combine these four levers, you're not just cutting costs, you're protecting covenants, easing capital cost pressure and buying breathing room inside the business. Top performing CFOs I work with are approaching this systematically, reinforcing their balance sheets while their competitors wait for external relief that may not come. In this environment, control of existing cash isn't just prudent financial management; it's the most reliable funding strategy available.