Harnessing the Three Cs: Cash, Cost, and COGS
Growth opportunities across the Middle East remain strong, but so does the need for financial discipline. Higher interest rates, inflation, and tighter liquidity are increasing pressure on capital allocation and operational performance.
For CFOs, the challenge is clear: support growth while preserving cash, protecting margins and maintaining financial resilience.
There are three financial levers that can address this challenge:
THE THREE Cs: CASH, COST, AND COST OF GOODS SOLD (COGS)
When optimized together, they can enhance liquidity and profitability and create the capability to invest in changing market conditions.
1. CASH
Operational Liquidity Over Static Reporting
In capital-intensive sectors like construction, infrastructure, and heavy industry, long working capital cycles and milestone billings can choke liquidity. The old, static balance sheet model is not prudent anymore. CFOs need to change to new, forward-looking cash management models and improve cash systems with rolling short-term cash flow forecasting models to see funding gaps before they happen:
Implement rolling short-term cash flow forecasting models to identify funding gaps before they occur.
Aggressively reduce cash conversion cycles by targeting operational bottlenecks: delayed billing, passive receivables escalation, and excess inventory buildup.
Enforce strict contract terms and formalise lender communication to optimise supply-chain liquidity.
With better liquidity control, CFOs will be able to better align funding capacity with growth ambitions, control refinancing risk, and retain stakeholder confidence
2. COST
Structural Efficiency over Short-Term Cuts
Middle East cost bases are facing structural pressure from localised inflation, labour mandates, required digital transformation spend, regulatory developments, and intensifying global competition. Reactive, short-term cost-cutting exercises are not sufficient in this scenario. CFOs at leading organisations must implement permanent structural improvements:
Redesign organisational structures to eliminate functional redundancy and establish clear business-unit accountability.
Rationalise third-party spending, consolidate vendor bases, and renegotiate supplier and subcontractor frameworks, thereby making procurement strategy a key lever for improving margins and cash generation.
Target high-friction back-office transactions for digital automation to permanently lower the cost of service.
CFOs can support long-term competitiveness and financial resilience by embedding cost discipline into the decision-making process
3. CoGS
Protecting Product and Project Margins
For industrial, manufacturing, construction, and consumer businesses, Cost of Goods Sold is still one of the most important determinants of profitability. The region’s continued price volatility, dependence on imports from other countries, logistics challenges, labour shortages, and fixed-price contract risk have continued to hit margins.
COGS need to be better administered by finance, operations, procurement, and supply chain teams.
Managing COGS requires the CFO and his/her finance team to embed themselves in supply chain
operations:
Establish unit-level and project-level cost tracking to understand exact margin contributors and leaks.
Diversify regional sourcing, capitalise on local content frameworks, and eliminate design customisation in favour of standard, modular delivery methods.
Rigorously monitor real-time cost-to-complete metrics on active projects to prevent margin slippage.
Improving the COGS improves profit margins, provides greater flexibility in pricing, and boosts competitiveness in progressively advanced regional markets.
IMMEDIATE PRIORITIES FOR REGIONAL CFOs
While priorities will vary by organisation, these actions consistently create the strongest foundation for effectively leveraging the three Cs:
- Establish dynamic cash management systems to identify liquidity risks and funding gaps early.
- Implement cost-efficient programs that are in line with long-term strategic goals.
- Develop COGS analytics and supply chain resilience to protect margins in volatile operating conditions.
THE EVOLVING ROLE OF THE CFO: BRINGING THE THREE Cs TOGETHER
Cash, Cost, and COGS are all interconnected levers and improvements in one of them strengthen the performance in the others. Better working capital increases liquidity, structural cost improvement improves cash generation, and better COGS performance protects margins and drives future investment.
For CFOs in the Middle East, there is merit in integrating these levers as part of a single performance agenda rather than as standalone initiatives.
In today’s operating environment, organisations that consistently outperform are those that combine disciplined cash management, structural cost efficiency, and sustained margin improvement with rigorous execution.
The Three Cs provide a practical framework for CFOs in achieving exactly that.
How can A&M Help
Our A&M Turnaround & Restructuring practice in the Middle East comprises hands-on operators with deep local knowledge and global restructuring expertise to deliver practical, result-oriented solutions for businesses facing financial and operational challenges.
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