At its most basic level, working capital is the cash flow needed to fund short-term costs and operations. However, the operative definition of working capital, its usage and its access has changed dramatically in the year since Visa’s release of the first Growth Corporates Working Capital Index. Where the inaugural 2023 edition of the index identified the tactical as well as strategic uses and best practices for working capital, the 2024 edition proves that the effective use of working capital has emerged as a critical factor in supporting growth for growth corporate CFOs and treasurers. Working capital solutions are not just about day-to-day liquidity but are a strategic lever for driving business growth.
“The key is to be proactive,” said Lauren Hewings, head of working capital solutioning at Visa told PYMNTS CEO Karen Webster. “With the right strategies in place, middle-market corporates can leverage working capital not just to survive, but to thrive in a competitive global market.”
Year two of the index examines CFOs and treasurers of growth corporates, defined as companies with $50 million to $1 billion in revenues. It draws insights about how they source and use working capital solutions. Visa commissioned PYMNTS Intelligence to design and conduct a global study of 1,297 CFOs and treasurers in 23 countries, operating in eight industry sectors.
Growth corporates face unique challenges. These companies are often too large for the financial products offered to smaller businesses but not big enough to fit the solutions typically designed for multibillion-dollar enterprises. Among the key findings in this report is the use of working capital solutions to enhance supply chain efficiency and support expansion. According to the index, 37% of CFOs and treasurers reported a year-over-year increase in investment toward expansion, driven by improved access to capital.
Best practices among top performers in this sector include integrating suppliers into enterprise resource planning (ERP) systems to streamline payments and optimize cash flow visibility. The index found that top performers pay 77% more of their invoices early, leading to stronger supplier relationships and potential discounts. This ability to efficiently manage capital allows these companies to scale operations, sustain growth, and build a more resilient supply chain. Top performers also saved $11 million in 2024, three times more than they reported savings in 2023, due to reduced interest rate costs and supplier discounts.
Another trend highlighted by Hewings is the consumerization and digitization of financial solutions. As detailed in this year’s report, as businesses adopt digital-first strategies, the demand for seamless, personalized, and on-demand financial tools has surged.
CFOs and treasurers are no longer satisfied with traditional methods of managing working capital. Instead, they are turning to digital solutions to enhance their working capital efficiency — with their operative word being “their.” CFOs and treasurers want bankers and solution providers with domain expertise who can walk the talk, and working capital solutions that are accessible when the company is ready to tap them.
Those practices, and others, she said, should encourage “all organizations in the middle market,” to look at their own strategies and perhaps adjust them to add more suppliers to their payment systems and to streamline processes. Verticals of note that have embraced digitization include agriculture and fleet and mobility.
“The move towards digital solutions is becoming table stakes,” Hewings said, and all industries are being transformed by the shifts in the workforce, as younger digitally savvy professionals (millennials and Gen Z) take positions of responsibility within their firms.
“They won’t put up with outdated, manual approaches to things,” she said.
That shift toward digitization and more efficient payment methods has led to a rise in virtual card use. As reported in the index, virtual cards — once used solely as a payables solution but now as a working capital tool — have seen a 32% year-over-year increase. In fact, virtual cards and negotiated terms (such as discounts for early payments) are the hallmarks of the top performers. The impact from that strategy: The actual savings, on average, for the top performers translates to $11 million.
“[Growth corporate] firms that rely on virtual cards are actually achieving higher index scores,” Hewings said. “We’ve been talking about using virtual cards as a working capital solution for a long time, but this year’s survey really shows that this group of CFOs and treasurers have been aligning themselves with that line of thinking as well. These companies are looking for flexible, on-demand solutions that provide real-time access to funds.”
The impact of digitization goes beyond convenience. Improved cash flow predictability, driven by digital solutions, allows businesses to plan more effectively and invest strategically. With real-time access to financial data, businesses can make informed decisions, ensuring that they are agile enough to respond to market shifts. As Hewings said, “The increased visibility into cash flows is one of the key benefits of digitization, empowering businesses to forecast accurately and optimize their working capital.”
Despite the benefits of digitalization, friction points remain. CFOs and treasurers surveyed in the index frequently report challenges in accessing working capital solutions tailored to their specific needs. Hewings acknowledged that while digital tools have improved, many solutions in the market are “templated, not very personalized, and can be expensive when needed in an emergency.”
One of the core issues identified in the report lies in the onboarding process. Lengthy approval processes for working capital solutions, particularly in emergency situations, can hinder a company’s ability to seize time-sensitive opportunities. For many businesses, this can result in missed growth opportunities or higher costs due to reliance on less optimal financing options. According to Hewings, some growth corporates in regions like Central Europe and the Middle East have expressed concerns about not having access to the tools they need.
This challenge is compounded by the varying degrees of digital maturity across regions and industries. For instance, sectors such as healthcare and agriculture are still exploring the potential of working capital solutions like virtual cards. However, the need for greater education and clearer access to these tools remains a barrier.
“There is a mismatch between what CFOs and treasurers are looking for and what financial institutions are offering,” Hewings said, pointing out the need for financial service providers to tailor their products more closely to the evolving demands of growth corporations.
Looking ahead, Hewings believes the role of CFOs and treasurers in managing working capital is set to become even more strategic. As businesses continue to grow, the ability to access and deploy capital quickly and efficiently will be crucial. Hewings believes that top-performing companies will lead the way in demonstrating how to leverage working capital as a tool for growth.
Hewings also emphasized the importance of proactive engagement with financial institutions. CFOs and treasurers need to be vocal about their requirements, she said, pushing for more personalized and flexible solutions that fit their specific business models. In return, financial institutions must adapt by offering more agile, customized products that meet the evolving needs of middle-market corporations.
Working capital is also being shaped by macroeconomic factors such as interest rate fluctuations. While recent interest rate cuts have lowered borrowing costs, Hewings cautioned that the benefits may not be immediate. “It takes time for these changes to impact daily financing, but businesses still need to tap into working capital solutions in the near term to maintain growth momentum,” she said.
For the FIs and the solutions providers, Hewings said, the working capital report and index offer up a roadmap — especially for Visa’s own banking clients — in giving middle-market firms what they need, and where there are gaps in what’s on offer to them, so they can react quickly to new business opportunities.
“This avoids the situations where [the corporates] need to ‘break the glass’ and access a more costly solution,” she told Webster.
This time around, the second time around as the Visa Working Capital report shows, it’s a “call to action for these middle-market organizations … to see how their counterparts are using these solutions,” Hewings said.
For the banks? “Take a look at the findings to see what your customers are telling us — and find the opportunities to provide greater access to working capital solutions to enable those businesses to grow in the ways in which they want.”
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