c2fo Outlook

On-Demand Capital for Every Business | 2024

The State of Working Capital

Discover how businesses are adapting to the higher cost of money and finding the funds they need to thrive.

Mixed News on Inflation

Conditions have improved, but businesses are still worried. Here’s why inflation is still the No. 1 threat.

Solving the Liquidity Problem

Nearly 60% of those surveyed would feel the impact if payments were delayed a month.

TABLE OF CONTENTS

What’s Inside

Most people expect economic growth, but some concerns still remain.

1. Methodology
2. Economic Outlook
3. Executive Summary
4. Inflation’s Impact
5. Solving the Liquidity Problem

METHODOLOGY

About the Survey

C2FO surveyed business leaders in four key markets in January 2024. Our goal was to assess the current state of working capital and its impact on businesses of all sizes. We tried to determine whether survey participants were confident or cautious, how they viewed the coming months and how they intended to put their resources to work.

Total Number of Respondents: 1,079 from four regions:

• Mexico: 220
• United States: 429
• United Kingdom: 216
• India: 214

Roles of survey respondents are executives: 80%

Company Type Years in Operation: 65% of survey respondents have been in business for over 10 years

EXECUTIVE SUMMARY

Business Leaders Expect Growth in 2024, but Working Capital Could Be a Problem

One thing was crystal clear from this year’s survey: Most respondents think their companies and economies will grow over the coming months, even as they keep one eye on inflation, higher interest rates and other concerns.

But higher growth comes with an inherent challenge, too. To fund payroll, inventory, materials and other costs, companies will need access to more working capital — even as persistently high interest rates make that capital more expensive, and businesses feel more pressure related to liquidity.

• 78% of respondents expect their businesses’ revenue to grow in 2024
• 32% believe their businesses will grow by more than 10%
• 88% of Indian respondents expect their businesses to grow, the highest among surveyed countries

Working Capital and Liquidity Concerns Remain

To find the capital they need, companies must look outside the traditional paradigm of borrowing and use sources that aren’t as reliant on interest rates. That includes options like dynamic discounting, supply chain finance, and invoice factoring — or new models that combine the best features of these solutions with increased flexibility and ease of use.

• 59% said they would feel an impact if their payment terms were extended by 30 days
• 24% of suppliers don’t have access to enough liquidity to operate for a year
• 42% of suppliers use dynamic discounting to access funding, suggesting there is room for growth

ECONOMIC OUTLOOK

Across Regions, Businesses Consistently Forecast Growth in 2024

There was little variation among regions — India was more optimistic than the United Kingdom, for example — but majorities expect their businesses to increase their revenues over the coming months.

What people are saying

• “The economy is a roller coaster. Inflation, employee shortages and cost of living are out of control.”
• “The cost-of-living crisis has made people reluctant to spend.”
• “Inflation is getting better, and prices are coming down.”

Hiring Is Expected to Grow Slightly or Hold Steady

Growth in hiring looks like it will continue in 2024, though a significant percentage of respondents plan to keep headcount close to where it is now.

Bright Spot: 54% Expect a Positive Impact From AI

Many businesses believe they will benefit from efficiency gains associated with artificial intelligence.

Inflation Remains the No. 1 Threat for Businesses

60% of respondents identified inflation as a threat for 2024, more than any other concern. Inflation continues to decline from the highs of 2022, but it’s still higher than pre-pandemic times.

• 67% Expect to Raise Prices, but Increases Should Be Relatively Mild

Majorities in all industries in this year’s survey expect to increase prices this year.

Interest Rates Are Another Big Question Mark for 2024

Interest rates weren’t the most cited threat in this year’s survey. It’s arguably worth more attention due to its impact on inflation and overall economic growth.

High Interest Rates Make It Harder for Businesses to Access Working Capital

Reported obstacles to accessing funding include high interest rates and poor cash flow.

Solving the Liquidity Problem

To Adapt, Many Companies Are Turning to Solutions Outside Traditional Lending

More businesses are looking at options that cost less and provide funding faster. Those could include:

1. Supply chain financing
2. Invoice factoring
3. Dynamic discounting
4. Next-generation solutions

SOLVING THE LIQUIDITY PROBLEM

Most Buyers Can Offer Dynamic Discounting. Among Those, Over Half Currently Use It.

Dynamic discounting may be more accessible because it doesn’t require a long approval process like many bank loans do.

THE BOTTOM LINE

How Smart Companies Can Thrive Over the Next 12 Months

• Embrace opportunities for growth
• Have a plan for managing interest rates and other challenges
• Explore new, innovative solutions

To learn more about C2FO’s solutions, visit www.c2fo.com.