The CFO's Cheat Sheet
8 Financial Tips to Improve Balance Sheet Health
In anticipation of a potential recession, it's more important than ever for CFOs to find ways to free up cash on their balance sheets. Having a strong balance sheet ensures your company will remain financially stable in any economic condition and allows you to take advantage of growth opportunities that may arise. While there are a number of different strategies CFOs can leverage to improve balance sheet health, here are a few of the most effective.
Invest in higher-performing segments of the business—and ditch those that aren't performing
By evaluating returns—or losses—from facilities, equipment, plants and other long-term hard assets, CFOs can identify low-performing assets. Selling or repurposing these assets allows CFOs to deploy cash to higher value activities and growth initiatives while delaying capital expenditure, thus improving a company's net income.
Review Accounts Receivables and Payables
Weak collection policies, slow invoicing, inefficient payment processes and out-of-market terms slows the cash-conversion cycle and ties up cash. CFOs can unlock extra cash for investment, dividend payments, debt payments and mergers and acquisitions by identifying gaps in receivables and payables from the prior year.
Usually, a thorough analysis can reveal process gaps, unfavorable and unnecessary terms with customers and vendors and other near-term opportunities, which can help streamline and unlock working capital.
Get Smart Credit Support
CFOs who use letters of credit, surety bonds and cash collateral as credit support for regulatory or commercial purposes risk misallocating liquidity.
A CFO and other stakeholders working with a legal expert can boost a company's liquidity by evaluating—on a regular basis—whether or not all credit support is still required. Where credit support is still necessary, CFOs should always examine the most capital-efficient way for their companies to offer financial collateral.
Reduce the Cash Going Out
A cash-flow deficit will lead to the eventual downfall of a business. However, reducing the money going out is an effective way to maintain a positive cash flow and improve the balance sheet.
CFOs can optimize cash flow by mapping out best-case, worst-case and likely scenarios. If the company's likely scenario is similar to the worst-case scenario, CFOs must find ways to minimize the cash going out to free up more cash. A good starting point for CFOs is to review every detail of a company's Profit & Loss Report and ask the following questions:
- Why is the company utilizing cash?
- Can the company achieve this goal more efficiently and cost-effectively?
- Should the company stop spending the cash altogether?
- Is there a better deal from this or another supplier?
Build Up Cash Reserve
Besides managing the cash going out, CFOs need to monitor the cash held closely. This is the money businesses build up to take advantage of an unexpected opportunity or to use during emergencies.
Without sufficient funds in reserve, businesses will always find themselves scrambling to secure financing quickly.
The general rule of thumb is, until a company builds up its hold or protective balance, a third should be invested back into the business to boost growth, a third should go back into operations and a third should be held.
Cash Flow Projection
Negative and positive cash flow swings do not have to find CFOs off-guard. CFOs can perform a cash flow analysis to identify trends of negative and positive cash flow swings in a business. This allows a CFO to predict when a company will have a surplus or deficit of cash which helps in planning for the best time to pay expenses.
The best practice here is to match a business's cash outflows to the inflows instead of depending on short-term borrowing to cover gaps. This is because, although short-term borrowing has lower interest rates, it still adds to the overall costs of a business.
Leasing Equipment and Devices
Leasing equipment, devices, motor vehicles and real estate may seem counterintuitive to someone who is only paying attention to the bottom line. However, leasing allows a company to free up more cash because it entails paying in small increments.
An added advantage of leasing is that lease payments are considered business expenses and thus can be deducted from a company's tax obligations.
Moreover, some devices and equipment can quickly become outdated, inefficient and incompatible with the latest technology. Constantly upgrading or buying new ones to keep up with technological advancements is very costly. Leasing devices and other equipment is an excellent way to stay up-to-date while freeing up cash to invest in high-value projects.
Unlock Illiquid Capital Trapped in Real Estate Through a Sale-leaseback
One often underused avenue of unlocking capital for company’s balance sheet is a sale-leaseback (also known as a sale-and-leaseback or leaseback). It is a financial transaction where a company sells its real estate to an investor for cash and then leases it from the buyer. When selecting a buyer, it’s important to find an established real estate investor who will value the property accordingly and will pay the full fair market value.
Real estate is an illiquid asset that is a drag on many companies' balance sheets— particularly those not in the business of owning real estate. A sale-leaseback enables a company to sell real estate to an investor-landlord and continue to use the property through a long-term lease.
Through a sale-leaseback, CFOs can unlock illiquid capital and reinvest it into growth initiatives or other high-performing areas of the business.
If you’re considering a sale-leaseback, check out “Is a Sale-Leaseback Right for Your Business?”
Conclusion
Having a strong balance sheet is critical for several reasons. Ensuring a company has strong cash flows helps support ongoing operations through any economic cycle and gives the company the ability to take advantage of growth opportunities.
If CFOs are interested in pursuing a sale-leaseback as part of their balance sheet strategy, working with an experienced partner like W. P. Carey can ensure the company is maximizing the value of their real estate and unlocking 100% of an otherwise illiquid asset. For a real-world example of how a sale-leaseback can be used to support a company’s balance sheet and growth, view a case study here.
Think a sale-leaseback might be a good fit for you? Get in touch today!
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Gino Sabatini, our Head of Investments, was recently a guest on the Net Lease Observer podcast. In the podcast, Gino discusses: His background in the restaurant business The history of W. P. Carey His view on how the investment market has changed over the years; and His outlook for 2026 and beyond Watch now An interview with Gino Sabatini, W. P. Carey, and Sean Hostert, Net Lease Observer.
The Net Lease Market Finds Its Footing
Net lease investors have been on a wild ride over the last few years. The large run-up in benchmark rates beginning in 2022 created challenges around pricing expectations. However, Jason Patterson, executive director, investments at W. P. Carey, notes that despite some trade volatility and other factors, more stability in long-term rates over the past two years has helped those on both sides of a transaction find more common ground on where pricing should land. Bid-Ask Spreads Narrow as Pricing Stabilizes For much of the reset period, sellers were anchored in 2022-era valuations, while buyers priced deals on materially wider rates, and that gap has begun to narrow. “A slightly more range-bound 10-year Treasury provides some confidence on where pricing should shake out,” says Patterson. He adds that increased capital inflows to the net lease space have also further compressed bids, driving more transactions to pencil out on both sides. Where sellers once struggled to meet the market, a more stable pricing environment has made that alignment more achievable. Tighter Credit Spreads and Sale-Leasebacks Support Deal Flow Patterson explains that credit spreads broadly had been near record lows until recently, a condition that he describes as helping keep cap rates from widening significantly. Tighter spreads benefit net lease investors both in how deals are capitalized and in the cap rates at which tenants and developers expect to transact. Patterson notes that he expects to see an increase in sale-leaseback interest driven by a pickup in private equity and M&A activity. He also adds that lower short-term rates may stimulate deal flow in private equity, and a change in ownership often serves as the catalyst for a sale-leaseback arrangement. Moving forward, Patterson points to interest rate volatility and credit as two of the most important factors for net lease investors. Rate volatility, he notes, can quickly undermine returns. He also flags credit as a persistent area of focus, noting that while recent headlines have raised broader concerns, the long-term nature of net lease real estate may make those risks more muted than in other sectors. And as the market moves into a more active phase, those who keep a close eye on both will be best positioned to capitalize on what Patterson sees as a period of growing opportunity ahead.
MIPIM 2026: Where Capital, Conviction and Opportunity Converge
As the industry gathers once again in Cannes for MIPIM 2026, the European real estate investment landscape appears to be at an important inflection point. After several years defined by volatility, repricing and constrained liquidity, there are growing signs of stabilisation — though the recovery remains uneven and market-specific. Against that backdrop, three questions are likely to dominate conversations at MIPIM this year: Are European transaction volumes expected to improve? How will the sale‑leaseback market evolve amid a significant wall of maturing debt? Which sectors appear best positioned as investors recalibrate their strategies? The Outlook for European Transaction Volumes Pricing expectations between buyers and sellers have adjusted meaningfully over the past 18–24 months, following one of the sharpest repricing cycles the European real estate market has experienced in decades. After a prolonged period of stalled activity, valuations across many markets now show clear signs of stabilisation, supported by greater transparency around interest‑rate policy and financing costs. While long‑term rates remain elevated relative to the pre‑2022 environment, the pace of change has slowed, allowing investors to underwrite returns with greater confidence and begin re‑engaging selectively with the market. This improved clarity around cost of capital is starting to translate into renewed deal momentum in several core European markets. Savills reports that European investment volumes are expected to rise by around 18% in 2026 as pricing firms up, macroeconomic conditions stabilise and institutional capital returns more consistently across the main sectors. That said, recovery is unlikely to be uniform. We continue to see divergence between markets and sectors, with liquidity gravitating toward assets where fundamentals are strongest and underwriting assumptions can be supported over the long term. Sale‑leasebacks and the Growing Need for Capital One of the most prominent themes we expect to discuss at MIPIM 2026 is the growing demand for alternative sources of capital — particularly as a significant amount of corporate and real estate debt comes due this year and next. Across Europe, many owner-occupiers are facing refinancing challenges in an environment where traditional bank lending remains selective and difficult to access. At the same time, businesses are contending with higher operating costs, investment requirements linked to competitiveness, and the need to preserve balance‑sheet flexibility. In this context, sale‑leasebacks are increasingly being viewed as a strategic financing tool. By unlocking capital tied up in real estate, owner-occupiers can redeploy funds toward growth initiatives, operational requirements and debt paydown, while retaining long‑term operational control of their assets. Sectors to Watch: Industrial and Retail When it comes to sector preferences, industrial and retail assets continue to stand out, provided they are underpinned by strong occupier fundamentals. In the industrial space, manufacturing and logistics assets that play a critical role in supply chains remain attractive. Structural trends such as nearshoring, supply‑chain resilience and e‑commerce continue to support demand in many European markets. Assets that are modern, well‑located and tailored to tenant needs are increasingly difficult to replace, reinforcing their long‑term importance. Retail also remains an area of opportunity — particularly for formats that serve non‑discretionary or value‑oriented consumer demand. Grocery‑anchored retail, DIY, and other essential retail categories have demonstrated resilience through economic cycles, supported by consistent foot traffic and defensive spending patterns. A Measured but Constructive Outlook MIPIM 2026 comes at a time when optimism is returning to European real estate markets. While challenges remain, there is growing evidence that capital is being deployed at more significant levels — particularly where opportunities are grounded in fundamentals rather than short-term trends. The conversations in Cannes this year are likely to reflect that balance: pragmatic, selective, but increasingly forward‑looking. For long‑term investors focused on durable cash flows and partnership‑driven transactions, the environment continues to present compelling opportunities.