North American Marketplaces Lead in Corporate and Virtual Card Usage

virtual cards, b2b payments, commercial payments

Despite economic challenges such as persistent inflation and market disruptions, growth corporates, commonly referred to as middle-market firms, in the North American region have demonstrated resilience. By employing external working capital solutions, these firms have improved their operational efficiency to sustain growth in an uncertain landscape.

In “The 2023-2024 Growth Corporates Working Capital Index (WCI): North America Edition,” PYMNTS Intelligence explored the working capital needs of these middle-market firms, which generate annual revenues between $50 million and $1 billion, in the agriculture, commercial travel, fleet and mobility, healthcare and marketplaces sectors. The research study, which was sponsored by Visa, dives into the strategies employed by CFOs and treasurers in managing the day-to-day needs of their businesses while ensuring sufficient cash flow for sustainability, growth, and expansion. 

Findings detailed in the report revealed that North American middle-market firms heavily rely on external working capital solutions to support planned growth, improve business metrics and manage cash flow. 

In fact, more than 70% of middle-market firms in the region that tapped into external solutions such as working capital loans, overdraft from corporate bank accounts and virtual credit cards reported that it improved their business metrics. Additionally, nearly 90% of them successfully negotiated favorable payment terms for new business initiatives.

The report also highlighted the strategic use of working capital solutions by top-performing middle-market companies. These companies focus on using external working capital for growth investment and to cover expected cash flow shortfalls.

For example, all top-performing middle-market firms in the fleet and mobility sector accessed external working capital to grow their businesses. Healthcare top performers also exhibited above-average utilization rates for strategic growth.

working capital, factors, North America

Taking a closer look at sectors, North American marketplaces stood out for using corporate and virtual cards more than other sectors, despite often relying on alternative methods. Last year, about 14% of North American marketplaces used this solution, compared to only 5% of agricultural middle-market companies.

“Virtual cards seem to increase the operational efficiency of Growth Corporates, as survey data shows a strong correlation between high operational efficiency for companies and industries that use this solution,” the study reported.

The study also noted that nearly one in three North American middle-market firms intend to adopt virtual cards in the coming year, with these cards set to serve as the primary working capital solution for about 5% of these companies.

ConnexPay, an all-in-one payments solution for online marketplaces, is among the firms embracing the virtual card trend, and has recently added Canadian dollars to its virtual card issuing offering, PYMNTS reported earlier this week.

The North American expansion facilitates payment processing in Canadian dollars (CAD) for ConnexPay’s U.S. customers, extending its services to a significant market of over 38 million individuals and 1 million businesses, as outlined in a Tuesday (Dec. 12) press release

“The U.S. trades $718.4 billion in goods and services with Canada annually, but transactions between the two countries often experience delays and additional fees,” the company noted. “ConnexPay’s solution lowers risk, providing faster and more cost-effective methods for businesses with stringent accounting requirements.”