Working Capital Fuels APAC High-Growth Corporates

Accessing working capital enables companies to avoid operational disturbances in the short term and power growth for the long term. In the Asia-Pacific (APAC) region, 66% of Growth Corporates accessed working capital solutions in the last year. This share is the second lowest rate of utilization across all five regions studied. Still, APAC Growth Corporates are giving working capital solutions another look, with 87% planning to use working capital solutions this year.87%: Share of APAC Growth Corporates using working capital to improve buyer-supplier relationships

APAC Growth Corporates report that external financing is important for improved buyer-supplier relationships. Eighty-seven percent of APAC Growth Corporates report using it for this purpose. A similar share report that using external financing is important to ensuring favorable payment terms and overall cost of capital for new business ventures.

These are some of the key findings detailed in “2023-2024 Growth Corporates Working Capital Index: APAC Edition,” a PYMNTS Intelligence report commissioned by VISA. The report draws insights from a survey of 151 corporate CFOs or treasurers at APAC Growth Corporates conducted between March 9, 2023, and June 12, 2023. We sought to understand the working capital solutions available to Growth Corporates, their preferred use of this capital, 2024 plans and the impact of these solutions on operations and business performance.34%: Share of APAC Growth Corporate marketplaces using working capital loans as their primary financing solution

Other key findings from the report include the following:

APAC Growth Corporates used several working capital solutions.

Working capital loans were the most popular working capital solution used by APAC Growth Corporates last year. Thirty-seven percent used these loans and 29% report that these loans were the top solution they used. A sector breakdown of usage shows that 34% of marketplaces used these loans as their main solution. This share is much higher than the 20% of healthcare companies that did the same.

Commercial travel Growth Corporates used external financing the most.

87%: Share of APAC Growth Corporates planning to use of external financing in 2024These firms concentrate at the extremes, as they are most likely to use external capital specifically to fund strategic, planned business growth (buying inventory, making investments and upgrading legacy systems). at 38%. In addition, these firms are also most likely to use external capital tactically for emergencies. This combination of strategic and tactical uses of external financing could explain the high utilization of virtual cards — a particularly versatile solution — among commercial travel firms in the region.

Top performers and bottom performers in APAC differ on working capital use.

Among top-performing Growth Corporates, 71% used external financing strategically to grow businesses via planned initiatives and upgrades. Among bottom-performing Growth Corporates, 74% used external working capital to cover expected cash flow gaps. Sixty-five percent did not use external financing at all.

Growth Corporates in APAC are unique among the regions studied. They feature a mix of advanced, emerging and developing countries. Data shows that the APAC region is exhibiting a notable shift toward growth-driven use of external financing. Download the report to learn more about how APAC Growth Corporates are accessing working capital solutions.