The Liquidity Trap: Why Profitable Companies Still Run Out of Cash

In this podcast, “The Liquidity Trap: Why Profitable Companies Still Run Out of Cash,” from the Business Masters | Cash Flow & Working Capital series, Pedro Eloy explores a critical challenge facing businesses today: how profitable companies can still find themselves struggling with liquidity. The episode features an insightful discussion from the interview with Sandro Figueiredo Pires, a Senior Executive specializing in Finance and Public Administration Law, regarding why liquidity problems rarely begin when the cash runs out, and examines the decisions that shape who gets paid, when they get paid, and how much risk a company is willing to carry. The dscussion highlights a critical “blind spot”: profitable companies can still face liquidity challenges due to timing gaps between customer receipts and supplier payments. It also discusses how customer concentration and a lack of independence between sales and finance functions can further compromise liquidity. You'll gain insights into: • Why profitable companies can still run out of cash • How customer concentration and bad debt create hidden liquidity gaps • Why collections belong at the heart of financial management • How diversification, supplier strategy and stress testing reduce liquidity risk • Why securing a payment date can transform collections • Why liquidity must be protected long before a crisis begins Business Masters, Behind the Decisions that Shape Successful Companies, is a program produced by Pedro Eloy and Chinchin Ma, featuring original articles and conversations with CEOs, founders, corporate leaders, innovators and industry experts on strategy, innovation, growth and performance. The series comprises radio, podcasts, articles & books, and explores the strategic frameworks, critical decisions, inflection points and leadership choices that shape high-performing organisations, combining these insights with rigorous analysis of industries, markets and business models to provide practical perspectives on the strategies, operating models and management decisions that drive sustained competitive advantage in sectors including technology, manufacturing, textiles and sport. This episode is an original Business Masters production, created by Pedro Eloy and Chinchin Ma for the Business Masters Series, with AI-assisted production. #Cashflow #WorkingCapital #Liquidity #CFO #CEO #BusinessLeadership #RiskManagement #FinancialManagement #BusinessStrategy #Collections #BusinessMastersSeries #SandroFigueiredoPires #PedroEloy #PelhamGrey