The utilization of working capital solutions among Growth Corporates in North America has transcended the conventional focus solely on investment purposes. Insights detailed in the “2023-2024 Growth Corporates Working Capital Index (WCI): North America Edition” by PYMNTS Intelligence underscores this evolution, shedding light on the diverse working capital strategies adopted by CFOs and treasurers across sectors like agriculture, commercial travel, fleet and mobility, healthcare and marketplaces.
Key findings from the report unveil a nuanced understanding of how these Growth Corporates, commonly referred to as middle-market firms, leverage working capital solutions. Notably, 48% of firms in the commercial travel sector accessed these solutions to cover expected cash flow shortfalls, alongside the prevailing trend of using working capital for growth investment.
It is also worth noting that working capital loans and overdrafts were the working capital solutions commonly employed by Growth Corporates in the commercial travel sector to manage expected cash flow gaps.
The research study also highlights the strategic use of working capital by top-performing Growth Corporates. In the fleet and mobility sector, all top performers accessed external working capital to fuel their business growth.
Similarly, 70% of top performers in the healthcare sector utilized working capital for strategic expansion. Moreover, agriculture and commercial travel middle-market firms demonstrated higher rates of utilizing working capital for cash flow continuity compared to the average among top performers.
Overall, over 70% of Growth Corporates in the region reported that accessing external working capital had a positive impact on their business metrics. Additionally, nearly 90% of these firms achieved favorable payment terms for new business initiatives.
However, while North American Growth Corporates have showcased significant resilience in navigating economic challenges through their adept use of external working capital solutions to bolster financial and operational management efficiency, there remains further ground to cover.
The report unveils a forward-looking perspective, indicating that 90% of middle-market firms are poised to tap into external financing. Working capital loans, bank credit lines, and corporate overdrafts are expected to be the primary working capital sources for these firms.
There’s an emerging trend toward the utilization of corporate virtual cards, signaling a growing interest in bolstering operational efficiency through innovative means. This drive towards seeking additional external financing underscores the continuous evolution of strategies among North American Growth Corporates, reflecting a proactive stance in optimizing resources for sustained growth and operational enhancement.
In conclusion, Growth Corporates in North America are not only utilizing working capital solutions for investment purposes but also to address cash flow challenges and tackle emergencies. Leveraging external working capital effectively equips these firms to enhance operational efficiency and navigate economic uncertainties adeptly, while propelling growth and achieving strategic aims.
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