3 Ways CFOs Balance the Capital Stack to Drive Growth

How businesses manage their working capital can be the difference between surviving and thriving.

With today’s interest rates fluctuating and supply chains rocked by uncertainty, forward-thinking chief financial officers are keeping their eyes on the ultimate operational prize of balancing their working capital stack, which can include cash, inventory, receivables and payables, by maintaining liquidity, profitability and stability.

Too much cash on hand? Businesses could be losing out on investment and innovation opportunities. Too little? Firms might be heading for a liquidity crisis. It’s a delicate dance, and only the most agile CFOs can keep the rhythm.

It’s not all smooth sailing. Rising interest rates and global macro uncertainty have made borrowing more expensive, putting pressure on CFOs to think creatively about funding strategies. Many are turning to alternative financing, including the use of virtual cards and supply chain financing, to keep their business engines running smoothly.

Findings from the “2024-2025 Growth Corporates Working Capital Index: Industry Factbook,” a PYMNTS Intelligence and Visa collaboration, revealed several trends redefining working capital management across industries that range from agriculture to media and technology.

The bottom line? Liquidity is king, but maintaining good supplier relationships is queen, and CFOs can’t win the game without both.

Read also: Keeping Up With the CFOs: The Value of Benchmarking Middle-Market Working Capital Efficiency

CFOs Juggle the Working Capital Stack Like Wall Street Acrobats

Today’s CFOs must not only keep the business afloat but also steer the ship toward growth.

PYMNTS Intelligence data found that innovative solutions are crucial to effective navigation, and Growth Corporates — or middle-market firms — are adopting digital-first financial tools, with virtual cards leading the charge.

The commercial travel sector saw a 45% increase in virtual card use over the past year, enabling enhanced cash flow visibility and faster invoice payments. Agriculture followed suit, linking commercial card adoption to a 21% rise in supplier payment integration and improved cash flow efficiency. As industries lean into digital solutions, financial agility and transparency are becoming critical advantages.

“Treasury software, for example, now allows us to reconcile cash across dozens — if not close to 100 — bank accounts in hours instead of days,” Hometap CFO Tom Egan told PYMNTS this month. “This functionality is massive for a capital-intensive business…”

Disciplined management, technology adoption and proactive working capital strategies are separating leaders from laggards. Approximately 62% of surveyed companies use external working capital solutions not as a last resort but as a growth enabler, per the factbook.

The agriculture sector, for example, achieved $6.8 million in average bottom-line benefits from reduced interest, inventory carrying costs and supplier discounts. Strategic initiatives, such as planned growth and cash flow management, outweighed emergency financial maneuvers across the board.

See also: The World Tour: How Working Capital Is Impacting Eight Global Industries

Early Payments and Supplier Integration Drive Efficiency

Efficiency is the name of the game for CFOs, and the tangible financial benefits of optimized working capital strategies are hard to ignore.

Against this backdrop, a one-size-fits-all approach to financial services is losing ground in the face of growing demand for tailored working capital solutions across different sectors. Customization is not just a preference but a necessity in today’s complex economic environment.

“Traditionally, the CFO role was very accounting-focused — making sure the books were straight and costs were managed,” Included Health CFO Mark Flakne told PYMNTS this month. “That will always be table stakes. But in the future, CFOs will be playing a more direct role in business development and structuring financial arrangements.”

Many industries reported gains by integrating suppliers into payment systems and prioritizing early payments. The retail and marketplaces sector, in particular, increased early invoice payments by 37%, reaping benefits like lower costs and strengthened supplier relationships, according to the factbook. These practices not only streamline operations but also position companies favorably for negotiating better terms with vendors.

As 2025 unfolds, the future could belong to those who treat working capital not just as a financial metric but as a strategic asset.

The highly anticipated interactive Working Capital Index report launched Feb. 20. Subscribe to the PYMNTS daily newsletter for exclusive access to this and hundreds of other research reports.