The fourth quarter marks the beginning of a critical phase for finance departments worldwide: the final push toward the annual financial statement. For large and multinational corporations, the year-end closing is the company's most important business card, a combination of a mandatory requirement and a strategic tool. It is a central instrument for corporate management and external communication.

The audiences for this document are diverse, and so are their interests. Investors analyse the figures to assess the profitability and stability of their investment. Banks and lenders use the statement to evaluate creditworthiness and define financing conditions. Business partners draw conclusions about the company's operational and financial health to determine its reliability for long-term partnerships. A strong and transparent balance sheet is therefore a strategic showpiece. It builds trust, strengthens negotiating positions, and significantly influences the company's perception in the capital market.

 

Challenges in the Year-End Closing Process

Year-end brings intensified challenges for treasury and finance, particularly, in the final months of the fiscal year. The central question is: "Where do we currently stand with our KPIs, and how can we achieve our goals in the short time remaining?" The immense pressure to meet deadlines for preparation and publication coincides with numerous strategic demands.

Discussions with stakeholders such as shareholders/supervisory boards, banks, and investors are imminent, and the presented figures will largely determine future collaboration. Will the banking partner extend financing lines, and under what conditions? Have agreed-upon KPIs like equity ratio and leverage been met? Are investors convinced of the strategy and financial performance? At the same time, internal goals, such as variable compensation for management, often depend directly on achieving specific working capital or other financial KPIs.

But which key figures do external stakeholders pay particular attention to? The focus is primarily on indicators that provide insight into financial stability, profitability, and capital structure. These include:

 

• Equity Ratio: This indicates the company's financial stability and independence. A higher ratio signals a more solid financing structure and better resilience to crises.
• Leverage (Gearing Ratio): This ratio of equity to debt is a central indicator of risk. Explicit agreements on its level are often found in credit agreements. Very frequently, pricing (margin grid) is also determined based on this KPI or its changes.
• Operating Cash Flow: It is a measure of a company's internal financing capacity. Strong operating cash flow shows that the company can generate sufficient liquidity from its core business to make investments and service debt.
• Working Capital: Optimised working capital signals operational efficiency. It shows how effectively a company manages its short-term assets and liabilities.

 

Strategic Control of the Balance Sheet at Year-End

A strong balance sheet at the end of the year is not a product of chance but the result of a consistent financial strategy. The goal is to actively shape the financial structure using available management tools. The focus is on the sustainable optimisation of liquidity and working capital to present the company's economic strength in a transparent and well-founded manner.

Working Capital Management as a Central Lever
Optimising working capital is arguably the most effective lever for improving balance sheet metrics. By intelligently managing receivables, inventory, and payables, companies can free up liquidity, increase cash flow, and strengthen the balance sheet structure without impacting operations.

Active Liquidity and Payables Management
Effective management of liquid assets goes far beyond simply ensuring solvency. It is a central risk management instrument that creates strategic flexibility. Actively managed liquidity serves as an important reserve for uncertain times and provides the necessary room for investments and growth opportunities.

This proactive approach lays the foundation for actively shaping balance sheet KPIs like liquidity, working capital, and leverage. A decisive lever for this is intelligent payables management. The approach lies in leveraging internal liquidity: instead of using external financing sources, operating cash flow is optimised through the strategic management of cash outflows. This allows the company's existing liquidity to be used longer and more efficiently.

 

cflox pay: The Right Tool for Balance Sheet Optimisation

This is precisely where the cflox pay solution comes in. It was developed to provide companies with a tool to manage their working capital and balance sheet KPIs with precision and predictability—all with an implementation time of just six weeks. A supply chain finance solution without suppliers—a paradox?

How cflox pay Works

The logic behind cflox pay is as simple as it is effective: a working capital optimisation that allows supplier invoices to be paid on the original due date while your own company benefits from an additional payment term of 60 days or more.

 

• Fast and Simple Implementation: Integration is straightforward, implemented as a new payment account in the client's existing ERP system. It is a pure CFO project led by Treasury, requiring no deep intervention in the processes of other departments. Implementation is typically completed within six weeks.
• 100% Control: The company retains full control and decides flexibly which supplier invoices are processed via cflox pay.
• No Supplier Involvement: Nothing changes for your business partners, as they are not involved in the process in any way. Payment is made punctually on the due date and in the company's name.

The impact on working capital and the balance sheet is visible immediately after implementation.

 

The Advantages of cflox pay for the Year-End Closing

 

• Targeted Working Capital Optimisation: Through the significant extension of payment terms (Days Payable Outstanding, DPO), working capital is optimised precisely and instantly. Liquidity that would otherwise be tied up in payables becomes freely available to the company.
• Improved Balance Sheet Ratios without New Financial Debt: The use of cflox pay leads to an increase in operating liabilities while maintaining them as such. This is considered best practice under local accounting standards as well as under IFRS. This enables active management of the gearing ratio.
• Increased Operating Cash Flow: Since the cash outflow for the paid invoices occurs 60+ days later, the operating cash flow for the reporting period increases significantly—a KPI highly valued by analysts and banks.

 

 

Realizing Additional Potential

Beyond working capital optimisation, cflox pay offers further strategic advantages. Despite the extended payment terms for your company, the supplier is paid punctually. This allows you to capture early payment discounts, which directly improve EBITDA. At the same time, guaranteed on-time payment strengthens relationships with strategically important suppliers and secures the supply chain.

 

Conclusion: Achieving a Strong Annual Financial Statement with Intelligent Solutions

Proactive and strategic management of one's own balance sheet is essential for sustainable corporate success. The final weeks of the year offer the decisive opportunity to set the course for a strong year-end closing that builds trust with investors, banks, and partners.

cflox pay offers an innovative, quickly implementable, and highly effective solution to significantly improve balance sheet quality and actively manage financial KPIs. Optimise your working capital, increase your cash flow, and improve your balance sheet structure—without taking on new financial debt.

Use the remaining time until the end of the year effectively. We would be happy to discuss in a personal conversation how you can precisely achieve your individual goals for the year-end closing with cflox pay.

 

Contact

Leonie Bauer

cflox GmbH

Gaußstraße 190c

22765 Hamburg

l.bauer@cflox.com