Visa’s Koenigsberg: Growth Corporates Suffer From ‘Broken Capital’ in Search of Liquidity

Growth corporates — companies with $50 million to as much as $1 billion in revenues — drive economies forward.

They’re the firms innovating, hiring and scaling. Eventually, they’re the companies that gain enough critical mass to grow into national and global leaders in their fields, from healthcare to manufacturing to retail.

Alan Koenigsberg, senior vice president and global head of large, middle market, treasury and working capital solutions at Visa, told PYMNTS CEO Karen Webster that this vital population of companies sits in a limbo of sorts.

They’re too large for small business working capital solutions to help them navigate business cycles — to make strategic decisions about how to manage cash flow and grapple with unplanned expenses. They’re too small for the enterprise solutions that are typically offered, in cookie-cutter fashion, by software vendors and banks.

As a result, these growth corporates don’t have the optimal tools on hand to manage day-to-day liquidity or tailor their days payable outstanding strategies to optimize cash flow.

Part of the problem lies with the fact that all too often when it comes to extending working capital at all, banks get “hung up on the numbers” and segment their underwriting and solutions according to various customer designations: small businesses, middle market and investment banking-level customers.

Moving to ‘Solution Selling’

A more optimal approach involves a shift to what Koenigsberg termed “solution selling,” which he defined as “a movement away from purveying a panoply of 40 different solutions for a corporate growth company to packaging solutions around workflow, payables, receivables and reconciliation.”

The 2023 Growth Corporates Working Capital Index, a Visa report, shows that corporate growth firms need better access to credit, better working capital management and improved accounts receivable and payables visibility as they make strategic day-to-day decisions.

Better visibility into cash inflows and outflows, the data shows, can help chief financial officers and other executives do more than meet the challenges of inflation and the high cost of capital. They can thrive and grow into new markets and embrace new opportunities.

As he noted to Webster of the takeaways from speaking to more than 870 growth corporate decision makers: one-on-one conversations with the CFOs and treasurers offer insight into how they use working capital solutions and where they see the gaps. That insight can and will help Visa expand its portfolio of solutions geared toward empowering growth corporates.

“The whole topic of ‘broken capital’ has become a massive discussion point in the industry,” Koenigsberg said. “Unlocking liquidity and working capital opportunities without having to go and borrow can manifest itself in so many different ways.”

Among the findings: Virtual cards are becoming a key tool in effective working capital management.

“The movement to card is moving faster because it’s a matter of straight-through processing,” he said. “The payments are easier to reconcile, and the whole process is more holistic.”

“The world’s changing very quickly,” he added. The days of low interest rates are decidedly over, offering a chance to refocus on what growth corporates need in the years ahead. “We need to adapt, and we need to adapt quickly.”