On-Demand Liquidity: Why CFOs and Treasurers in Food Production Must Reevaluate Payment Terms

Raw Materials Define Working Capital

In food and beverage production, working capital starts on the field, on the farm or at the commodity exchange. Few industries are as heavily impacted by liquidity being tied up early, long before any product is created. Whether agricultural producers, mills or dairies, these companies carry the largest cash block in the entire value chain. Raw materials, packaging and energy must be procured well in advance – often seasonally concentrated, under intense price pressure and within increasingly fragile supply chains. 

The combination of seasonality, perishability and pronounced price volatility makes the production stage the critical point of working capital. When producer prices fall – as recently seen with potatoes, for example – margins come under pressure. When they rise – such as with cocoa or coffee – liquidity is massively bound. 

For CFOs and treasurers, this means they must be able to respond flexibly to new market dynamics and actively manage volatility. What’s required is an active approach to managing the cash conversion cycle and liquidity that ensures operational resilience – directly influencing profitability and the stability of the business model.

Cash Flow Structure and Key Pain Points in Production

For CFOs and treasurers, the cash flow structure in production is not merely an operational detail, but a strategic condition that determines how much financial leeway a company truly has over the course of a year. 

• Procurement side: Liquidity is tied up very early: seeds, feed, flavorings, packaging, energy and logistics must be pre-financed – often long before value creation begins. Investments in cooling facilities, storage technology or processing equipment further amplify liquidity needs. 

• Sales side: Payment terms of 60, 90 or even 120 days are not uncommon on the customer side. Despite having delivered the product and carried the operational risk, cash inflows are delayed. 

• Seasonality & volatility: Harvesting, processing and distribution follow differing peaks and troughs. Prices and therefore costs fluctuate significantly. Defensive inventory strategies bind additional capital, increase hedging requirements and drive financing costs – challenges producers must be prepared for. 

• Balance sheet and investment pressures: Alongside operational working capital, strategic investments such as sustainability, automation or energy-efficiency compete for liquidity. CFOs face the trade-off between future-proofing the business and securing short-term liquidity.

Payment Terms and Liquidity as Strategic Levers

The next evolution in financial management for large producers is integrated control of liquidity and risk. CFOs and treasurers are no longer just responsible for efficiency and optimization; they are tasked with strategic steering and stability in an increasingly volatile environment – where commodity prices, energy, weather and demand fluctuate weekly. 

One often overlooked lever is the structuring of payment terms in procurement. Extending payment terms moves cash outflows closer to the point of product sale, optimizing the cash conversion cycle. This is especially valuable in production environments where inventories fluctuate seasonally. Dynamic payment terms – adapted to commodity prices, demand or supplier structures – create additional flexibility without taking on new debt. CFOs gain flexibility, secure liquidity and maintain necessary stocks rather than binding capital unnecessarily. 

“On-Demand Liquidity” solutions – such as those enabled by cflox pay – shift the liquidity lever exactly where it matters: into the payment process itself. Payments to suppliers are made on time and unchanged, while buyers realize additional payment terms. The key advantage: no negotiations with suppliers, no contractual amendments and no changes on the supplier side are required. 

This opens a new role: CFOs become liquidity architects, actively balancing price, procurement and supply fluctuations. Tools that support operational control thus become the most vital defense against market volatility.

Identifying Potential Together

Every production structure is unique – seasonal patterns, customer portfolios, investment cycles and supplier dependencies vary widely. Yet in almost every company lie untapped liquidity reserves, often hidden within the logic of working capital. 

cflox helps CFOs and treasurers systematically unlock these potentials: from analyzing seasonal liquidity patterns to strategically creating additional payment terms with cflox pay – without negotiations, IT overhead or burdening suppliers.