MIAMI, FL – On the surface, the fiscal performance of North America’s largest corporations appears robust. Revenue is climbing, profitability is hitting historical peaks, and operating cash flows have reached their highest levels in over a decade. Yet, beneath these glossy headline figures lies a brewing financial paradox. According to the 2026 North American Working Capital Survey, released this week by The Hackett Group, the 1,000 largest public companies in North America are currently sitting on a staggering $1.94 trillion in untapped working capital—a 12% increase from the previous year.
While executives may be tempted to celebrate high EBITDA margins and record-breaking cash flow, the data suggests that these companies are inadvertently trapping vast amounts of liquidity in inefficient internal processes. The report serves as a stark warning: the traditional metrics of success are masking deep-seated operational fractures, particularly within the receivables cycle.
The Core Findings: A Record-Breaking Disconnect
The 2026 survey paints a picture of a corporate landscape caught between growth and stagnation. In 2025, aggregate revenue for the surveyed firms rose by 6% to $17.6 trillion, while EBITDA margins climbed to 21%. Despite this, the amount of cash tied up in working capital relative to revenue hit an all-time record.
This reversal is critical. For three consecutive years, companies had been successfully optimizing their working capital. The 2026 data confirms that this progress has not only stalled but has been entirely wiped out. While companies are better at generating profit, they are becoming increasingly inefficient at converting that profit into actual, usable cash.
"The headline numbers suggest many organizations had a very successful year, but a closer look shows a different story," noted Gerhard Urbasch, associate principal at The Hackett Group. "Companies generated strong growth and profits, yet more cash became trapped in the processes that convert revenue into cash. Receivables have become the largest and fastest-growing source of working capital inefficiency."
A Chronology of the Working Capital Erosion
To understand how we arrived at this $1.94 trillion impasse, it is necessary to examine the components of the Cash Conversion Cycle (CCC). The CCC, which measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, offers a granular view of the current crisis.
- 2023–2024 (The Era of Improvement): For three years, the corporate sector saw consistent, albeit incremental, improvements in their cash conversion cycles. Companies focused heavily on lean operations and tightened supply chains, leading to better working capital ratios.
- 2025 (The Shift in Priorities): As global supply chains faced renewed pressure from geopolitical tensions, tariff uncertainty, and the need for diversification, corporations began prioritizing "resilience over efficiency." This led to a deliberate decision to carry more buffer stock, causing inventory levels to swell.
- 2026 (The Current Reality): The latest findings reveal that while the overall CCC improved by a marginal 0.2 days (to 38.4 days), this figure is deceptive. The improvement was entirely artificial, driven by aggressive extensions of payment terms (payables), which masks a severe deterioration in how quickly companies collect on their sales (receivables).
Supporting Data: The Anatomy of Inefficiency
The breakdown of the $1.94 trillion opportunity reveals where the capital is being hemorrhaged. The "opportunity" represents the potential cash that could be unlocked if companies reached top-tier performance levels.
1. The Receivables Crisis
Receivables now represent the single largest source of untapped value, accounting for $773 billion—a 29% year-over-year increase. Days Sales Outstanding (DSO) worsened for the third consecutive year, a trend observed in 40 out of the 50 industries analyzed. Alarmingly, aggregate receivables grew at 11%, nearly double the pace of revenue growth, indicating that companies are essentially "loaning" money to their customers for longer periods, often without clear strategy.
2. The Inventory Dilemma
The inventory opportunity stands at $616 billion, up 6% from the previous year. This reflects a strategic trade-off: in an era of supply chain fragility, firms are choosing to hold larger stockpiles of raw materials and finished goods to ensure they can meet customer demand. While this protects against stockouts, it ties up massive amounts of capital that could otherwise be deployed for R&D or shareholder returns.
3. The Payables Mirage
Payables performance was the only area of improvement, with the opportunity remaining stable at $548 billion. Days Payable Outstanding (DPO) reached its best level since 2021. However, The Hackett Group cautions that this is a "borrowed" success. By extending payment terms to suppliers, companies are managing their cash flow, but they are not addressing the underlying inefficiency of the conversion process. This strategy has a shelf life and cannot be considered a sustainable path forward.
Official Responses and Strategic Implications
The consensus from the experts at The Hackett Group is that the "siloed" approach to working capital—where collections, billing, and procurement operate in isolation—has failed.
"The data shows that sustainable improvement requires a broader focus on how revenue becomes cash, not just isolated initiatives aimed at collections or payment terms," Urbasch explained.
The implications for the C-suite are significant. Executives must move away from the mindset that simply "squeezing the supply chain" via longer payment terms is a viable strategy. Instead, they must view the Order-to-Cash (O2C) cycle as an integrated, end-to-end process. The survey highlights that inefficiencies often start long before an invoice is issued; they are rooted in flawed credit decisions, poor order accuracy, and cumbersome dispute management.
The AI Solution: Redefining Performance
Perhaps the most compelling finding in the report is the role of Artificial Intelligence in bridging the working capital gap. The Hackett Group’s AI World Class benchmark research indicates that the future of liquidity management lies in process-led AI.
According to Kathleen Wiedeman, senior director at The Hackett Group, leading organizations are already moving beyond simple automation. "The working capital challenge is increasingly becoming an AI opportunity," Wiedeman said. "Leading organizations are not simply applying AI to existing processes. They are redesigning end-to-end workflows across order-to-cash, forecast-to-fulfill and purchase-to-pay."
The performance delta between "AI World Class" companies and their peers is staggering:
- 138% more automated credit decisions.
- 134% greater digital order intake.
- 89% more automated cash application.
- 85% fewer delinquent days.
These metrics demonstrate that AI is not just a productivity tool; it is a fundamental shift in how corporations manage their balance sheets. By automating the friction points that cause delays in cash conversion, companies can effectively "untrap" the $1.94 trillion currently sitting idle in their systems.
Conclusion: A Call for Transformation
The 2026 North American Working Capital Survey serves as a reality check for the modern corporation. While the current era of growth has provided a comfortable buffer, the underlying data confirms that efficiency is eroding.
The path forward is clear: Companies that rely on traditional, manual, and siloed management of receivables, inventory, and payables will continue to see their working capital requirements balloon. Conversely, organizations that adopt a process-led, AI-driven approach to their entire supply and revenue chains will likely emerge as the market leaders of the next decade. The $1.94 trillion opportunity is not merely a figure on a spreadsheet—it is a call to action for leadership teams to modernize their operations before the next downturn exposes the fragility of their current cash management strategies.
