2022 WORKING

CAPITAL SURVEY

Challenges, Opportunities — and the Overlooked Threat

Businesses Need to Prepare For

About the Survey

Businesses need working capital the same way that human beings need oxygen and water. A reliable source of funding is absolutely essential for any venture’s growth and survival.

This past spring, C2FO surveyed companies around the world about their access to financing. Our goal was to create a clear picture of how — or even if — companies can secure the money they need to thrive.

1,240 respondents in 10 countries — each with final say or influence over financial decisions in their business.

Introduction

After more than two years of COVID-19 and other disruptions, we’re unlikely to return to the same pre-pandemic state. Businesses around the world continue to face major disruptions related to skyrocketing inflation, rate hikes, global conflict, supply chain shortages and — yes — more COVID-19. Despite that, most expect better things in the near future.

KEY FINDINGS

CURRENT SENTIMENT: NEGATIVE

39% of global respondents view their country’s current economy negatively, vs. 28% who see it as positive. 50% of US respondents said the economy was not very good or not good at all.

FUTURE OUTLOOK: POSITIVE

68% of global respondents predict higher revenues at their company over the next 12 months.

83% of respondents from Mexico expect higher revenue.

TOP THREAT: INFLATION

63% believe inflation will have a negative impact on their business over the next 12 months, more than any other concern. 25% of those surveyed said they expect to raise prices by 6% or more.

Economic Sentiment

How Do Businesses View the Economy in Their Country?

European and North American markets were more negative than Asia Pacific.

Economic Sentiment Overview

39% Not very good or not good at all 28% Good or excellent

Rising inflation was one of the leading reasons respondents gave for viewing the economy poorly. The US was substantially more negative — 50% of its respondents described the economy as bad, compared with 57% of respondents from India, who rated conditions as good or excellent. Mexico, meanwhile, was in line with the global average.

The No. 1 Threat: The High Price of Everything

Globally and in North America, inflation is now viewed as the biggest threat to businesses over the next 12 months. COVID-19, the previous top threat, remains No. 2.

63% of global respondents expect a negative impact from inflation.

• No. 1 Inflation
• No. 2 COVID-19

Higher Prices Lead to Even Higher Prices

Inflation has risen at a pace unseen in decades across essentially all verticals.

On average, 25% of those surveyed expect to raise prices by 6% or more. Respondents from the US and Mexico expected slightly smaller increases of 2.8% and 2.9% respectively.

To Fight Inflation, Interest Rates Are Rising Sharply

Higher interest rates make it more expensive for businesses to access the capital needed for growth.

Among the global respondents who expected a negative impact from higher interest rates, 47% said they would increase prices if rate hikes are as bad as feared. Others said they would postpone investments in new products or services, scale back pay increases or throttle their production.

Liquidity Could Worsen — and Too Many Businesses Aren’t Ready

Good news first: Most of those surveyed said they had access to adequate liquidity for their business for the next 12 months. However, 21% globally said they don’t have enough liquidity.

Alternatives

Too Many Businesses Are Missing the Best Solution for Liquidity Problems

Among the survey’s respondents, the top three sources of working capital were:

• Cash flow from operations
• Owner's investment/capital
• Revolving line of credit or term loan from a bank.

ESG Plays a Larger Role in Business Financing

Sustainability and diversity are becoming a bigger part of business relationships. 43% of respondents say they have been offered preferred terms for their sustainability practices.

Conclusion

Around the world, businesses still feel confident about the future, even as they face challenge after challenge today, from supply chain shortages to global conflict to the continuing effects of a worldwide pandemic. The 2022 Working Capital Survey is a reminder that for businesses to achieve their vision of growth, they’ll need reliable access to affordable working capital, the lifeblood of every business.