Visa, in partnership with PYMNTS Intelligence, has launched a new benchmarking tool for middle-market CFOs to evaluate their working capital efficiency compared to industry peers. This tool, featuring a calculator and interactive report, is based on a study released by Visa and PYMNTS Intelligence in September 2023. The report is called “The 2023-2024 Middle Market Growth Corporates Working Capital Index.”
A five-minute benchmarking exercise distills the findings of nearly 900 CFOs across five industry sectors and 23 countries to produce a tailored report for those executives. The interactive version of the report offers a way for users to filter study results based on industry and region, without charts and surveys and without having to read through the PDF version.
Alan Koenigsberg, SVP and global head of Large, Middle Market, Industry Verticals and Working Capital Solutions at Visa tells PYMNTS CEO Karen Webster it will help CFOs and Treasurers gain insight and strategy surrounding working capital efficiency.
Broadly speaking, Middle Market firms, those companies that are in growth mode and at present have top lines ranging from $50 million to $1 billion, have been exploring new ways to use working capital and have been exploring new ways of accessing that working capital in the first place.
Among the key findings of the index, users of working capital — strategically and tactically — outperformed those firms that did not use working capital. Roughly a third of Growth Corporate CFOs used external working capital solutions for strategic growth purposes. Just about the same percentage of Growth Corporate executives used those same solutions to cover cyclical shortfalls and seasonal gaps in their cash flows.
The financial impact can be significant. The data shows that top-performing Growth Corporates saved an average of $3.3 million annually by using working capital solutions. The most efficient Growth Corporates have annual sales between $50 million and $250 million, are more prevalent in the marketplace sector and operate within the Latin American and Caribbean regions.
As to the actual working capital solutions, 36% used working capital loans. As many as 19% used bank lines of credit. Sixty-two percent of firms generating revenue between $750 million and $1 billion used virtual card solutions as a growth strategy. The use of virtual cards as a working capital solution is projected to triple through the next year, according to the data.
For access to the Interactive Report:
https://visa-commercial-solutions.visa.com/working-capital-index-report/
For access to the Calculator:
https://visa-commercial-solutions.visa.com/working-capital-calculator/
The 2023-2024 Growth Corporates Working Capital Index, a Visa report, examines the business conditions and working capital requirements of 873 businesses according to their CFOs and treasurers across five industry segments, five global regions, and 23 countries. The sectors in this study include fleet and mobility, marketplaces, commercial travel, healthcare/medical and agriculture. Respondents hail from North America, Europe, the Asia-Pacific (APAC), Latin America and the Caribbean (LAC), and Central Europe, the Middle East and Africa (CEMEA).
PYMNTS Intelligence, a leading global research and data analytics firm, designed and conducted the study between March 9 and June 12, 2023, and developed the methodology to analyze and produce the index’s key findings.
The 2023-2024 Visa Growth Corporates Working Capital Index explores how firms use external working capital solutions — and how these decisions impact firms’ operational efficiency. The firms that were evaluated in our framework earned an index score ranging from 0 to 100, with higher index scores indicating higher operational efficiency. The firms that scored in the top 20% of the index were classified as top performers.
Read more about the index and results for 2023-24 here.
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