Global Survey Finds Business Leaders Optimistic About 2024 Despite Working Capital Challenges
Inflation remains the No.1 threat to companies, while long cash conversion cycles threaten access to the working capital needed for growth.
KANSAS CITY, Mo., May 1, 2024 /PRNewswire/ -- The majority of today's business leaders expect to see revenue growth this year, with 32% believing revenues will grow by more than 10%, according to the 2024 Working Capital Survey from C2FO, the world's on-demand working capital platform.
While most respondents said they currently have the liquidity they need, nearly 1 in 4 businesses don't have access to enough capital to operate for a year. Nearly 60% said that increasingly longer payment terms with customers require them to find alternative sources of working capital to fund their growth goals.
Respondents identified several challenges to accessing capital.
- 54% named high interest rates as the largest obstacle to funding access in 2023.
- 42% expected higher interest rates to negatively impact their growth in 2024.
- Only 17% of suppliers reported having a borrowing rate below 5% at the beginning of 2024.
The survey, conducted in January 2024, asked over 1,000 financial decision-makers and executives in the United States, the United Kingdom, Mexico and India to determine their economic outlook and current working capital usage and needs. The respondents represented businesses of various sizes, with 80% serving in executive roles and 65% coming from companies that had been in business for more than 10 years.
Most companies' overall economic outlook remains positive. Globally, companies expect revenue growth, headcount increases and only mild price increases:
- 78% of companies are expecting revenue growth.
- 43% said they expect to increase headcount, while only 3% predict a more than 10% headcount reduction.
- 59% said they plan to increase prices by 1%-10%, suggesting inflation may still be hard to beat in 2024.
Analysis of additional C2FO network data from 2023 underlines the optimism about growth and the anxiety about inflation. With over 45 million invoices loaded onto the C2FO platform nightly, the average unique invoice size increased by 12% last year.
"Many businesses are seeing conditions improve, but the post-pandemic pains still remain. Supply chain issues can pop up, and worker shortages and labor costs still threaten nearly half of the survey respondents," said C2FO Chief Sales Officer Colin Sharp. "They can't control the economy, but they do have more flexibility and control over the health of their cash flows than they might realize."
With loans becoming more expensive or out of reach, businesses looking to strengthen their capital can get more out of their cash flows by looking outside traditional borrowing.
Dynamic discounting is one such approach. This model helps businesses get paid early for their outstanding invoices in exchange for a small discount. It differs from the more well-known practice of invoice factoring, which often comes with higher costs and greater disruption. Per the survey:
- Just 20% of global respondents currently use early payment options.
- C2FO Early Pay can significantly reduce a company's time to be paid to less than 10 days, far less than the 30+ Days Sales Outstanding (DSO) reported by roughly half of global respondents.
"Supply chain finance (SCF) and other cash management solutions are nothing new to large enterprises. However, they're missing out if they aren't exploring the next generation of solutions that deliver greater flexibility in an unpredictable economy," Sharp said. "Modern supplier finance solutions like C2FO's Dynamic Supplier Finance™ enhance what works in a traditional SCF program by making it faster, more resilient with a broad funding network, and more accessible to all suppliers."
As the global leader in working capital, C2FO is working to ensure solutions are available to businesses of every size and industry. The International Finance Corporation (IFC) estimates that for every $1 million provided to a small or midsize business, 16.3 jobs are created, making equitable access to funding a win-win for all businesses. The C2FO platform helps accelerate payment from enterprise customers, using their own balance sheet, a network of banks or a combination of both, to their suppliers in exchange for a small discount, putting money in their accounts faster, sometimes on the same day. No borrowing is involved, and it is far more convenient and cost-effective than other forms of financing. A full report on the survey's findings can be downloaded here.
About C2FO
C2FO is the world's on-demand working capital platform, providing fast, flexible and equitable access to low-cost capital to businesses worldwide. Using patented Name Your Rate® technology and a suite of working capital solutions, companies can get paid sooner by the world's largest enterprises and banks — unlocking billions in risk-free capital. With a mission of ensuring that every business has the capital needed to thrive, C2FO has delivered more than $350 billion in funding around the world. Founded in 2008 and headquartered in Kansas City, USA, with offices around the globe, C2FO is working to build a better, more inclusive financial system every day. To learn more, visit c2fo.com.
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Carrie Bratcher
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SOURCE C2FO
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