Working Capital Efficiency Rises 2.5% Among North American Middle-Market Companies

North American middle-market firms are demonstrating resilience, fueled in part by an increasing and more strategic use of financial tools.

The “2024-2025 Growth Corporates Working Capital Index: North America Edition,” commissioned by Visa and conducted by PYMNTS, revealed an uptick in the adoption and efficient use of external working capital solutions among firms in the United States and Canada. Based on insights from 276 chief financial officers and treasurers across eight industry segments, the study found that adoption of these solutions increased by 15% across the region in 2024, contributing to a 2.5% improvement in overall working capital efficiency.

North America now ranks second globally in working capital efficiency among regions analyzed in the index, achieving an average score of 52, indicating a primary focus on planned and strategic objectives over tactical ones. This marked the second year of the study examining the working capital efficiency of this market segment.

Often referred to as middle-market companies, Growth Corporates typically generate between $50 million and $1 billion in annual revenue and possess unique characteristics, including a focus on growth while sometimes being underserved by traditional providers. The report series evaluates their working capital needs and the available solutions based on in-depth qualitative and quantitative research. The survey included 196 respondents in the U.S. and 80 in Canada, representing industries such as healthcare, agriculture, commercial travel, fleet and mobility, marketplaces/retail, manufacturing/construction, and professional/facility services.

Key data points from the report include:

• Eight in 10 surveyed North American Growth Corporates used working capital solutions, with the share of firms using them increasing 18% in the U.S. and 10% in Canada. Increases in adoption were seen in healthcare (up 46%) and agriculture (up 31%). Meanwhile, manufacturing and construction maintained high utilization rates at 97%, and fleet and mobility at 94%.
• Overall working capital efficiency across North America rose by 2.5%, with smaller firms (revenue between $50 million and $250 million) experiencing a 10% increase. The agriculture sector saw a 17% increase in efficiency. Top-performing Growth Corporates, comprising 17% of the surveyed firms, reported average bottom-line benefits of $9.7 million. These firms demonstrate superior metrics, including 48% shorter cash conversion cycles, 42% shorter days inventory outstanding and 22% shorter days payables outstanding compared to lower-performing counterparts. They also saved an average of $181,023 in borrowing costs by securing lower interest rates than bottom performers, a sum representing 24% of bottom performers’ working capital financing costs.
• The data suggests a reassessment of working capital sources. In the U.S., corporate/virtual cards saw a 54% increase in use among Growth Corporates, valued for their flexibility and convenience. Bank lines of credit also grew in use in the U.S. (up 95%) and Canada (up 51%), while working capital loans decreased by 33% in Canada. Overall, bank-related solutions gained prominence in Canada.

Looking ahead, over 8 in 10 North American Growth Corporates plan to continue using working capital solutions, with flexible options like corporate and virtual cards expected to see the greatest increases in utilization. Growth Corporates cited costs and lengthy approvals as the two biggest drawbacks when selecting solutions, and many expressed a desire for smoother, digital-first application processes and personalized, adaptable financing options from their banks.

While some sectors anticipate economic headwinds like a global recession or supply chain disruptions, the most efficient firms project further metric improvements, likely fueled by their strategic use of working capital.

The report also details how working capital solutions are increasingly used for strategic growth initiatives, including inventory purchases and expansion opportunities, rather than solely for tactical needs.

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