A company operating at a 20% EBITDA margin can increase cash flow by roughly one-third by reducing costs by 10%.
That math, according to Hernan Rizo, helps explain why cost optimization deserves more attention from finance leaders.
Speaking during a panel discussion at the Institute of Management Accounts’ 2026 conference in Tampa, Florida, last week, the CFO of Titan International, which manufactures and recycles specialty metal products for aerospace, energy and defense customers, argued that companies can unlock cash already inside their businesses through a much more disciplined approach to costs.
Rizo pointed to opportunities in procurement, inventory management, labor planning and a range of expenses that often receive less scrutiny.
"If your company runs at a 20% EBITDA margin and you're able to restructure costs by 10%, value is not a question. It's 10%. You just added 33% cash flow to your business," Rizo said. "That is more than your sales team signing a gigantic company. That is more than your R&D team developing a new product. More than your CEO getting you back into a new line of business. And this is all on us, financial professionals, to manage the cost of our company."
Procurement and inventory can free up capital
In his discussion, Rizo encouraged finance leaders to begin with a detailed review of spending throughout the organization.
"Take a look at it line by line because everything counts," he said. "Make a list of everything that you think of to manage anything. Bring the CEO and COO along for the ride. They're key players in getting the support to make it happen."
Procurement is one area he believes deserves additional focus. "If you do not have a procurement manager, [I’d say having one] is not an expense; this is an investment," Rizo said. "These people will help you manage the cost of your costs in a much clearer, more efficient way than just letting everyone buy what they need to buy or let the CEO or COO buy. Have a professional person."
Rizo also encouraged companies to evaluate supplier relationships more broadly. "You can save way more than 10% by bidding on your entire business instead of just one segment," he said. The opportunity, he explained, comes from leveraging purchasing power across the organization rather than approaching contracts one at a time.
Inventory management was another area he highlighted. "Most companies carry more inventory than they should, [and] in fact, it's really about 20% more inventory than they should. This is a lot of money stuck in units."
Rizo said companies often have opportunities to release cash tied up in inventory through better coordination across operations and sales. "Work with your COO, talk about lean manufacturing, talk about just-in-time delivery. Work with your sales team, talk about incentive measures to help them move that slow-moving inventory," he said. "Free up that inventory. That's going to free up a lot of capital in the organization."
Rizo added that organizations should determine the inventory levels required to operate effectively and focus on releasing the remaining capital. "Find out what the optimal level of inventory is for your organization and free up everything else," he said. "You got cash for better use than just sitting in your warehouse."
Overtime deserves scrutiny
Labor costs represented another major focus of Rizo's presentation. "Overtime. I hate overtime," he told audience members.
"Every manager of every company I have ever worked knows that if I see overtime in my field, they need to be in my office at 7 a.m. the next morning and explain to me why."
Those conversations often point to larger operational issues, he said. "The real reason to have overtime is poor planning and poor execution."
Rizo also encouraged finance leaders to pay close attention to staffing models and demand planning. "How many companies [are still staffed] to peak levels of demand?" he asked. He explained why organizations should understand what demand looks like over the course of a year and build staffing plans around that reality. "Find out what that average level of demand is for the year and start with that," he advised.
Everything counts
Rizo encouraged CFOs to spend time reviewing expense categories that often receive less attention during budgeting discussions. Workers' compensation was one example he gave.
"Safety takes safety seriously," he said. "You [have] to take it very, very seriously."
Insurance was another area where he believes finance leaders can create value through consistent oversight. "I renew my insurance every single year," Rizo said. "Every year, I talk about the renewal process." He encouraged CFOs to regularly evaluate providers and pricing rather than treating annual renewals as administrative exercises. "You have to shop around," he said.
The same discipline applies to tax incentives and professional services. Rizo encouraged finance leaders to ensure they are taking advantage of available credits and periodically revisiting longstanding vendor relationships. "If you do any level of R&D in your organization, make sure you're getting your tax credits for R&D," he said.
Throughout the discussion, Rizo returned to the same principle. "If 10% is your goal, everything counts," he said. "The best time to talk about cost is now.”
