The Untapped Potential in Working Capital in Asia Pacific
Working capital is the lifeblood of any business, especially for Growth Corporates – businesses that sit between small businesses and large enterprises. Developed in collaboration with PYMNTS, Visa’s Growth Corporates Working Capital Index 2023-2024 uncovered that while Growth Corporates see that working capital can help accelerate growth and improve business relationships, not all are fully benefiting from available solutions such as external financing, trade credit, and corporate cards.
Visa has defined Growth Corporates as businesses that generate between US$50 million to US$1 billion in annual revenue, with the Index focusing on businesses in healthcare, commercial travel, and marketplace segments, among others.
The under-utilisation of working capital solutions leaves Growth Corporates vulnerable to cash flow disruptions in the short term and can jeopardise growth in the long term. However, the Index also notes that more Growth Corporates are thinking about using working capital solutions in the future, with non-traditional solutions picking up steam in Asia Pacific.
1 in 4 Growth Corporates in Asia Pacific are not benefiting from working capital solutions
According to the Visa Growth Corporates Working Capital Index 2023-2024, despite 80% of firms in the region reporting that external financing is important for their business, 25% are still not benefiting from improvements arising from using working capital solutions. Across the five regions surveyed, Asia Pacific recorded a below-average Index score of 47.4, suggesting there is much more opportunity for Growth Corporates to make the most of working capital solutions to drive their business.
This suggests that Growth Corporates in the region are not taking full advantage of working capital solutions available to accelerate their business. The Index has also ranked Asia Pacific third among five regions globally, behind Latin America and Carribean (first) and North America (second).
Growth Corporates in Asia Pacific use external financing more strategically than tactically, with 64% of those surveyed using solutions for strategic growth or cash flow purposes. Across all industries examined, working capital loans were the most popular solutions, with overdrafts, virtual cards, and bank lines of credit being common alternatives.
Usage of working capital solutions to rise, as more firms see benefits
While the Index reveals existing missed opportunities, its findings suggest that Growth Corporates intend to use working capital solutions more in the future. 87% of Growth Corporates in Asia Pacific plan to use them in 2024, a healthy growth from 66% in 2023.
This is in part due to increasing appreciation among firms of what working capital solutions can do for them. More than 7 in 10 Growth Corporates in Asia Pacific say that accessing working capital solutions improved their buyer-supplier relationships, as they were able to negotiate better terms, extend payment cycles, and reduce invoice disputes. They also said working capital solutions reduced their costs for new business initiatives, such as launching new products, entering new markets, or acquiring new customers.
More firms using non-traditional solutions to think strategically
As the awareness of working capital solutions grows among firms in Asia Pacific, a key area of opportunity is the adoption of corporate and virtual cards. According to the Index, the use of these solutions will increase 2-fold year-on-year to 29% in 2025, with firms valuing the efficiency as cards make transactions simpler, safer, and more integrated with suppliers and customers alike.
Their ease of use also means it is easier to think, plan, and act strategically, without having to go through complex applications and processes to procure loans, financing, or other credit facilities with financial institutions. In fact, 73% of Growth Corporates in Asia Pacific anticipate using virtual cards strategically to fund planned growth initiatives and cash flow gaps, as firms start to use working capital solutions for long-term benefit, instead of seeing them as short-term remedies.
As the business landscape becomes more dynamic and competitive, Growth Corporates in Asia Pacific need to be more proactive and strategic in managing their working capital needs. By tapping into the untapped opportunity of working capital solutions, such as corporate or virtual cards, they can unlock their full potential and achieve their growth ambitions.
Access the full Visa Growth Corporates Working Capital Index here.
Contact your Visa representative to learn how working capital solutions can help your business.