Mid-Market Companies Rewrote Rules of Working Capital in 2024

A defining trend of the past quarter-century has been digital innovation’s impact in moving business operations from reactive to proactive.

Working capital, the cash flow that fuels day-to-day operations, is one of many components being caught up in this ongoing shift. Traditionally, managing working capital relied on historical data, manual processes and delayed insights — a reactive stance that often led to cash flow disruptions, missed opportunities and suboptimal decision-making.

As we enter 2025, what was once a reactive, tactical tool for managing short-term cash needs is now serving increasingly as a strategic lever for growth. Improved operational efficiencies, flexible financing tools and digital innovations such as virtual cards are helping position working capital at the core of corporate strategy.

After all, the numbers in PYMNTS Intelligence’s “The 2024-2025 Growth Corporates Working Capital Index” tell a compelling story: the Working Capital Index score increased an impressive 7% in 2024, driven in part by a 21% surge in early invoice payments and a 16% jump in strategic use of external capital.

This shift was particularly evident in the healthcare sector across Europe and Asia-Pacific, where strategic working capital deployment has skyrocketed by 41%.

But what’s really turning heads is how expansion-minded companies — those with $50 million to $1 billion in revenues — are leveraging this financial muscle.

Read more: Solving the Working Capital Goldilocks Paradox: 3 Best Practices for CFOs

Strategic Use of Working Capital as a Growth Catalyst

The game-changer? Virtual card payments, which grew their usage by 32% and transformed from a simple vendor payment method into a sophisticated working capital solution along the way.

“They’re the superpower of working capital,” Darren Parslow, global head of Visa Commercial Solutions, said of virtual cards to PYMNTS last month, noting that this shift reflects the broader trend in corporate finance of leveraging virtual cards to optimize cash flow, extend days payable outstanding (DPO) and streamline working capital.

By aligning spend management with credit solutions, firms are able to enjoy more capacity to turn transactions into opportunities for liquidity and growth than traditional solutions allow, in part by leveraging virtual cards as both a payment and financing tool.

“The key is to be proactive,” Lauren Hewings, head of working capital solutioning at Visa, told PYMNTS. “With the right strategies in place, middle-market corporates can leverage working capital to thrive in a competitive global market.”

The impact is significant: per the study, companies that strategically deploy working capital solutions report a 21% increase in net profit margins. Top performers have a 51% shorter cash conversion cycle than bottom performers, indicating they are much faster at converting investments into revenue.

This translated to an average of $11 million in bottom-line profit from benefits, including reduced inventory carrying costs and supplier discounts — a 300% increase from 2023.

Even more striking, only 1.2% of top performing growth corporates reported unpredictable financing needs in the past year, compared to 49% of bottom performers. Top performers are 97% less likely to face unpredictable financing needs than bottom performers.

Read more: The Two Things That CFOs and Treasurers Want From Working Capital Solutions

Working capital is being unlocked by top performing growth corporates who use it as a strategic resource to enter new markets, expand product lines and upgrade their systems and infrastructure.

“The B2B money movement space has not yet benefited from some of the real innovations,” Seamus Smith, executive vice president group president at FIS, told PYMNTS, noting that checks still account for “nearly 40%” of B2B payment volume in the U.S., even though they are prone to fraud and reconciliation errors.

Looking ahead to 2025, the trajectory is clear. Approximately 80% of CFOs and treasurers plan to increase their use of external working capital, with virtual card usage projected to double. Retail and marketplace companies are expected to lead this charge, though the trend spans across sectors.

What’s driving this revolution? The answer lies in flexibility and personalization. Growth Corporates are increasingly demanding financial partners who bring more than just capital to the table. They want industry expertise, tailored solutions and bankers who understand their specific sector challenges. The data backs this up: 22.6% of companies prioritize personalized products and services, while 17.6% focus on better rates and terms.

Banks should consider investing in developing industry-specific expertise and personalized solutions to meet the evolving needs of Growth Corporates. This could include integrating digital technologies, offering flexible products such as virtual cards and building strong relationships with their clients.

In the PYMNTS Intelligence report “CFOs Want Virtual Cards in Their Toolkits,” 56% of CFOs say virtual cards are key for managing financial flexibility.

Read more: Flexible Working Capital Solutions Top Holiday Wish List for B2B Firms

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