Resources | Market Trends | July 12, 2022

Working Capital Survey 2022: Businesses Are Optimistic About the Future but Need to Prepare for Tighter Liquidity

The report includes feedback from decision-makers in 10 countries.

The report includes feedback from decision-makers in 10 countries.

Around the globe, businesses aren’t happy with the current economic conditions, but they still believe their companies and the overall economy will see growth over the next 12 months, according to C2FO’s 2022 Working Capital Survey.

However, a combination of forces — including sky-high inflation and higher interest rates — could make it harder for businesses, especially smaller ones, to access the funding they need to to survive and grow.

If the Federal Reserve and other central banks continue to raise rates, that could eventually make it much more difficult for companies to quickly secure capital from lines of credit and other forms of lending.

Fortunately, there are alternatives that aren’t as reliant on interest rates, like dynamic discounting, that aren’t as widely used by businesses. To prepare for challenging times, financial decision-makers should start exploring how those tools can be applied when necessary.

The most recent Working Capital Survey was conducted by Morning Consult in early April and includes responses from 1,240 business leaders in 10 countries, representing both small businesses and large enterprises.

The survey is designed to create a clearer picture of how — or if — companies are able to access working capital, so that business leaders can make more informed decisions about this critical aspect of their operations.

Key findings from the report

Those surveyed were more likely to say current economic conditions are not very good or not good at all (39%) in their country, though North American and European respondents tended to be more negative. When asked about the next 12 months, 44% of respondents expected their country’s economy to improve, versus 33% who saw it getting worse and 24% who think it will remain the same.
The majority of respondents (68%) believe their company’s revenue will grow over the next 12 months.
Globally, inflation was viewed as the top concern among respondents — 63% of respondents expect a negative impact from rising prices over the next 12 months. The coronavirus pandemic, which has dominated the conversation for more than the past two years, is still weighing on respondents’ minds.
Among respondents who expect a negative impact from inflation, 57% of respondents said they would likely raise prices if inflation is as bad as feared. Overall, about 25% of global respondents expect to increase their prices by 6% or more.
About one-fifth of respondents (21%) said they don’t have enough liquidity in their business. The smallest businesses — those with fewer than 50 employees — were most likely to report a lack of liquidity (27%).
Dynamic discounting and invoice factoring, which are less sensitive to interest rate hikes, were currently among the less available sources of capital – 49% and 44%, respectively.