The majority of today’s business leaders expect to achieve revenue growth this year, with 32% believing revenues will grow by more than 10%, according to the 2024 Working Capital Survey from C2FO, an on-demand working capital platform.
While most respondents said they currently have the liquidity they need, nearly one in four businesses don’t have access to enough capital to operate for a year, while early 60% said that increasingly longer payment terms with customers require them to find alternative sources of working capital to fund their growth goals.
Respondents identified several challenges to accessing capital:
- 54% named high interest rates as the largest obstacle to funding access in 2023.
- 42% expected higher interest rates to negatively impact their growth in 2024.
- Only 17% of suppliers reported having a borrowing rate below 5% at the beginning of 2024.
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The survey, conducted in January 2024, asked over 1,000 financial decision-makers and executives in the United States, the United Kingdom, Mexico and India to determine their economic outlook and current working capital usage and needs. The respondents represented businesses of various sizes, with 80% serving in executive roles and 65% coming from companies that had been in business for more than 10 years.
Most companies’ overall economic outlook remains positive. Globally, companies expect revenue growth, headcount increases and only mild price increases:
- 78% of companies are expecting revenue growth.
- 43% said they expect to increase headcount, while only 3% predict a more than 10% headcount reduction.
- 59% said they plan to increase prices by 1%-10%, suggesting inflation may still be hard to beat in 2024.
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Analysis of additional C2FO network data from 2023 underlines the optimism about growth and the anxiety about inflation. With over 45 million invoices loaded onto the C2FO platform nightly, the average unique invoice size increased by 12% last year.
“Many businesses are seeing conditions improve, but the post-pandemic pains still remain. Supply chain issues can pop up, and worker shortages and labor costs still threaten nearly half of the survey respondents,” Colin Sharp, chief sales officer of C2FO, said. “They can’t control the economy, but they do have more flexibility and control over the health of their cash flows than they might realize.”
With loans becoming more expensive or out of reach, businesses looking to strengthen their capital can get more out of their cash flows by looking outside traditional borrowing.
Dynamic discounting is one such approach. This model helps businesses get paid early for their outstanding invoices in exchange for a small discount. It differs from the more well-known practice of invoice factoring, which often comes with higher costs and greater disruption. Per the survey:
- Just 20% of global respondents currently use early payment options.
- C2FO Early Pay can significantly reduce a company’s time to be paid to less than 10 days, far less than the 30+ Days Sales Outstanding (DSO) reported by roughly half of global respondents.
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“Supply chain finance (SCF) and other cash management solutions are nothing new to large enterprises. However, they’re missing out if they aren’t exploring the next generation of solutions that deliver greater flexibility in an unpredictable economy,” Sharp said. “Modern supplier finance solutions like C2FO’s Dynamic Supplier Finance enhance what works in a traditional SCF program by making it faster, more resilient with a broad funding network, and more accessible to all suppliers.”
A full report on the survey’s findings can be downloaded here.
