40% of Mid-Sized LatAm Firms Use Working Capital to Fuel Growth

40% of Mid-Sized Latam Firms Use Working Capital to Fuel Growth

In the Latin America and Caribbean (LAC) region, 40% of mid-sized companies use various working capital solutions to support planned growth, driving the highest average score of all regions worldwide.

That’s according to “The 2023-2024 Growth Corporates Working Capital Index: LAC Edition,” a PYMNTS Intelligence and Visa collaboration that also found approximately 88% of top performers in the region accessed working capital for the same purpose, particularly in the agriculture and commercial travel sectors. This indicates that the use of working capital contributes to successful growth and operational efficiency. As the region continues to navigate economic challenges, working capital solutions will play a role in business performance.

Working capital gains

Future Outlook

The report highlighted that 94% of LAC mid-sized companies are expected to access external working capital solutions next year for planned growth investments. The range of working capital solutions is broad and diverse, but some emerged as preferred options. For instance, working capital loans were cited by 31% of mid-sized company CFOs as very likely solutions to use the next year. Additionally, 17% cited bank lines of credit and 11% third-party revolving facilities.

On the other hand, 13% of top-performing companies in the region said they plan on accessing virtual cards next year. This method streamlines payments by eliminating days of delay and reducing administrative tasks, which results in better cash flow management.

As for the sources of external working capital solutions and advice, LAC companies primarily trust banks. Approximately 6 in 10 mid-sized companies in the region said they seek advice from bankers, and roughly one-third turn to working capital consultants.

About the Numbers

The 2023-2024 Growth Corporates Working Capital Index: LAC Edition” explores the working capital needs of mid-sized companies in the LAC region. The study defines growth corporates as firms generating annual revenues between $50 million and $1 billion in the fleet and mobility, commercial travel and agriculture sectors.