Visa’s Growth Corporates Working Capital Index Reveals 300% Increase in Working Capital Efficiency

10/21/2024


Top performing growth corporates surveyed saved an average of $11 million, with virtual card usage jumping 32%

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 20, 2024-- Visa (NYSE:V), a global leader in digital payments, announced 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 YoY efficiency increase of 300%.

The Index surveyed nearly 1,300 CFOs and Treasurers across 8 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% YoY 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,” said Lauren Hewings, Visa’s Head of Working Capital Solutioning. “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.

For more information about the Growth Corporates Working Capital Index, please visit: https://global-corporate.review.visa.com/solutions/commercial-solutions/knowledge-hub/working-capital-index-report.html.

About Visa Inc.

Visa (NYSE: V) is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions and government entities across more than 200 countries and territories. Our mission is to connect the world through the most innovative, convenient, reliable and secure payments network, enabling individuals, businesses and economies to thrive. We believe that economies that include everyone everywhere, uplift everyone everywhere and see access as foundational to the future of money movement. Learn more at Visa.com.

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1 Top performers are characterized by superior predictability in financing needs, which enables them to use financing more strategically than less efficient counterparts. Growth Corporates at the top of the Index are more likely to be in a stable financial position, either with the help of external working capital or without and are therefore the least likely to have needed financing for emergencies.

David Thum
dthum@visa.com

Source: Visa Inc.