Visa, a global company in digital payments, released the findings from its second annual global Growth Corporates Working Capital Index. The findings revealed an astounding increase in working capital usage and efficiency, with an 81% adoption rate of at least one working capital solution in 2024. Beyond increased adoption, top-performing companies1 saved an average of $11 million in interest and fees, a year over year efficiency increase of 300%.
The Index surveyed nearly 1,300 CFOs and treasurers across eight industry segments and 23 countries, all representing “growth corporates,” organizations that generate between $50 million and $1 billion in annual revenue.
Beyond the increased adoption of working capital solutions, virtual cards saw a particularly high uptick. These solutions offer flexible, on-demand working capital solutions that provide access to funds as corporate needs require. Virtual cards saw a 32% Y/Y increase in usage and were intrinsically linked to top-performing Index scores. Surveyed growth corporates who used virtual card solutions saw higher probability of reduced days payable outstanding (DPO), strategic utilization of working capital, better cash flow predictability, more supplier integration into payment systems and early supplier payment.
The Index notably highlights that CFOs and treasurers of growth corporate businesses want relationship-based banking and personalized working capital solutions tailored to their specific industry, spending habits and business needs. Five out of eight industries represented by survey respondents cited lengthy approval processes and uncertainty about approval outcomes as their most significant obstacles, as respondents expressed the need for bankers with both the lending experience and working knowledge of their industry and region to design working capital solutions that fit their business requirements. And the stakes are high: 90% of respondents reported negative consequences when working capital access was denied or took too long.
“Growth corporates have unique needs and capabilities that often fall through the cracks between small businesses and enterprises,” Lauren Hewings, head of working capital solutioning at Visa, said. “This valuable segment, which really represents tomorrow’s enterprises, has historically lacked access to customized, industry-tailored products and solutions from their financial institutions; however, increasingly, they are demanding them from their financial institutions as they seek flexible, on-demand methods for optimizing cash flow to drive strategic growth.”
Additional key findings include:
- More than half (58%) of top performers surveyed improved their working capital ratios, as evidenced by 51% shorter cash conversion cycles and 28% shorter days payable outstanding.
- Strategic use cases drove 62% of working capital use. CFOs and treasurers were 35% more likely to use solutions to invest in company assets and 37% more likely to have invested in organic growth and expansion, than last year.
- Developing markets and specific industries experienced remarkable gains: North America’s agriculture sector saw a 17% index surge, healthcare in Europe and Asia-Pacific (APAC) led with 16% gains, and retail in Central Europe, Middle East and Africa (CEMEA) witnessed a dramatic 26% increase in index scores.
- Top performers surveyed achieved a 21% increase in their net profit margins and a 14% increase in their working capital ratios.
- Top-performing CFOs and treasurers are three times more likely to use virtual cards next year than bottom performers. Virtual cards provide access as needed to pay suppliers early, which is often associated with more favorable pricing from key suppliers.
_x000D_
_x000D_
_x000D_
_x000D_
_x000D_
More information about the Growth Corporates Working Capital Index is available online.
