Report: Global CFOs Say Access to the Right Working Capital Solutions Remains Challenging

Companies rise — or fall — based on how they manage working capital.

In accounting terms, working capital is a simple construct: Subtract the liabilities of a firm from the assets on hand, and the capital that’s left over is what’s on hand to fund operations.

But beyond that dry equation lies the art of management, of juggling the funds at the ready, and augmenting them with financing and banking solutions that help boost efficiency and liquidity.

In the second edition of “The Growth Corporates Working Capital Index,” a Visa-commissioned PYMNTS Intelligence report, 1,297 CFOs and treasurers across 23 countries and five industry sectors told us that access to digital-first solutions pave the way for future growth.

The Growth Corporates have been defined as companies with annual top lines of between $50 million to $1 billion. Tapping into external financing is critical for these firms as they confront the daily challenges of running a business, executing long-term strategies, dealing with unplanned events and seizing expansion opportunities.

Better Cash Conversion Cycles

The latest index found that companies leveraging external financing are twice as likely to experience improvements in working capital ratios and cash conversion cycles.  Additional funding, such as credit lines or loans, help augment the cash that’s already available in the corporate coffers.

The top 20% of performers, we found, sport 51% shorter cash conversion cycles and 28% shorter days payable outstanding (DPO) than Growth Corporates in the bottom 20% of index scores. The bottom line impact has been palpable, as the top performers reported saving an average of $11 million in interest, inventory carrying costs and supplier discounts.

The benefits are keenly felt across supply chains, as more than 70% of companies using working capital solutions said that buyer/supplier dynamics improved as a result, and more than two-thirds said that they were able to meet end-market demand and opportunities for growth.

Confronting the Challenges

There’s widespread embrace of working capital solutions, as 81% of the firms we surveyed said they’d used at least one solution in the past year, a 13% bump from the previous year.

And yet, even as the CFOs and treasurers said they were cautiously optimistic about the future – which means they expect to grow – the actual access to working capital solutions remains challenging, to put it mildly.

Only 2.6% of the Growth Corporates we surveyed — a sliver — said they had “no” drawbacks when the sought to tap into the benefits of working capital.  Cost and getting approval were mentioned as the most significant drawbacks.

For the banks providing these solutions, there’s untapped potential — namely by offering a tailored, digital-first and on-demand suite of working capital solutions, they’ll increase the use of those products and services.

To get a sense of how these providers’ own fortunes might get a boost, consider the fact that roughly 80% of CFOs and treasurers in professional and facility services expect to use solutions strategically and 57% expect to use them to drive business growth. More than three-quarters of commercial travel and retail/marketplace firms we surveyed said they intended to use working capital solutions in a strategic manner.

The preference for on-demand solutions, such as corporate and virtual cards and bank lines of credit has increased. Corporate/virtual cards have become the third-most popular working capital solution among top performers. Virtual cards, which have built-in DPO extensions, are linked to more strategic uses of external capital, as they can be used to pay suppliers promptly, or even early in exchange for discounts.

Fleet and mobility firms, we found, had the highest rate of virtual card utilization across industries, at 19%. Overall, 14% of Growth Corporates used virtual cards in 2024, up from 10% in 2023. Bank lines of credit have also seen increased usage, with 26% of Growth Corporates employing them, compared to 19% the previous year.