Picture the CFO at a $300 million industrial distributor. For three years she paid her key suppliers on day 10 of a net 30 invoice and pocketed a 2% discount for the trouble. It was policy. Nobody had to approve it. Then, sometime last spring, her three largest customers stopped paying her early. They didn’t pay late. They paid on the due date, to the day. Her cash still arrived. It just arrived with no cushion, and no way to know which week. By summer she’d stopped paying anyone early, and she’d drawn on a credit line for the first time in years to cover the gap.
That story showed up 120 times in the fourth edition of the PYMNTS Intelligence Working Capital Index, which surveyed CFOs and treasurers at North American firms with $50 million to $1 billion in revenue. It brings the series to nearly 1,000 finance leaders over four years in North America, and for the first time, the Working Capital Efficiency Index fell. The score dropped 6% to 51.6, giving back three years of gains in one.
Working Capital Went Back to Being a Cash Flow Tool
The first three editions told a story of middle market firms using working capital to grow. They paid suppliers early, captured the discounts, wired suppliers into their payment systems and borrowed to fund plans they’d already made. That was the strategic edge.
In 2026, three of the four behaviors the index rewards moved against it. Early payments to suppliers fell to 17% of payables from 37%. Firms reporting unpredictable financing needs more than tripled. Planned growth as the reason for borrowing slipped to 28% from 33%. Only supplier integration improved, and mostly because the bottom tier finally caught up.
It Started With Customers
PYMNTS Intelligence Index shows that early receipts collapsed to 12% of receivables from 35%, the largest single move in the study. Two-thirds of receivables now land exactly on the due date. Late payments barely budged.
Customers didn’t stop paying. They stopped paying early, and the cost was certainty. Seven in 10 firms now cite uncertainty about when money will arrive as a consequence of customer payment behavior, up from 46%. For three editions, the share of payables paid early tracked the share of receivables received early within three points. Middle market firms pay the way they’re paid. When early money stopped coming in, it stopped going out.
The macro backdrop helps explain why. Tariffs doubled as a reason to replace a supplier. One supplier in six was swapped out in the last 12 months, a series high. The cost of money doesn’t explain it. Policy rates are lower than when the series began. Firms borrowed more in a year when borrowing got cheaper. The binding constraint is the timing of cash, and the price of it is secondary.
Firms Borrowed to Cover the Gap, and for a Different Reason
The index report shows that the use of external working capital solutions hit 83%, a series high, and 61% of firms now use two or more. Bank lines of credit rose to 69% of solution users. Corporate and virtual cards quadrupled. Working capital loans fell. Firms reached for revolving credit because revolving credit bridges a timing gap without a new application. The on-demand nature of cards and lines of credit support this cash flow stopgap behavior.
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For the first time since 2023, tactical reasons for borrowing overtook strategic ones. Cash flow management and emergencies now beat planned and unplanned growth, 45% to 38%.
Top Performers Kept the Edge, and Use AI as a Decision Maker
Every top performer uses artificial intelligence in treasury. So do 97% of bottom performers, at similar depth. Bottom performers use more external solutions, not fewer. Tools no longer separate the tiers.
Predictability does. Some 70% of top performers report financing needs that stay constant through the year, against 3% at the bottom. Their cash conversion cycle runs 39 days against 63. And they’re the only tier reporting clear returns on AI at scale, 26% against 14%.
The difference becomes what they let the tools do. Top performers would let AI forecast a cash shortfall at 93%, against 69% at the bottom. Nearly 6 in 10 would let it decide when to draw on a credit line. One in 5 would let it execute a transaction above $100,000. Nobody at the bottom would. Top performers treat AI as a decision-maker. Everyone else treats it as an adviser.
The Edge Returns When Predictability Does
Two routes lead back to working capital as a strategic growth lever. Customers resume paying early, which no CFO controls. Or firms build the predictability that makes early payment affordable no matter when customers pay. Top performers already chose the second route, and it’s available to anyone with a forecast they trust enough to act on.
Asked what they want from their banks, CFOs put an advisory relationship at the top of the list, ahead of any product. That tells you where their heads are. The fifth edition will tell us whether 2026 was a pause or a new floor.
For all of the details, download the 2026 Working Capital Efficiency Index, North America edition, a PYMNTS Intelligence report.
At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.
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