MIAMI, FL – On the surface, the 2025 financial performance of North America’s 1,000 largest public companies paints a picture of robust health. Revenue surged by 6% to hit $17.6 trillion, while EBITDA margins reached an impressive 21%. Operating cash flow, a critical barometer of corporate vitality, climbed to a 13-year high. Yet, beneath these glossy headlines lies a systemic financial vulnerability that threatens to undermine long-term stability: a record $1.94 trillion in "trapped" working capital.
According to the 2026 Working Capital Survey released today by The Hackett Group, Inc., this inefficiency has grown by 12% over the prior year. While executives celebrate growth, the processes that convert that revenue into actual cash are becoming increasingly bloated and inefficient. For the modern enterprise, the primary challenge of 2026 is no longer just generating sales—it is fixing the leaky plumbing of the cash conversion cycle.
The State of the Cycle: A Closer Look at the Data
The survey reveals a paradox: while the aggregate Cash Conversion Cycle (CCC) improved by a marginal 0.2 days to 38.4 days, this figure is a statistical mirage. The improvement was not driven by operational excellence across the board but rather by a heavy reliance on stretching payables—essentially delaying payments to suppliers to keep cash on hand longer.
When dissecting the components of the CCC, the cracks in the foundation become clear:
- Days Sales Outstanding (DSO): Deteriorated by 2.1 days.
- Days Inventory Outstanding (DIO): Increased by 0.6 days.
- Days Payable Outstanding (DPO): Improved by 2.9 days.
The data confirms that gains in payables performance merely offset the deterioration in receivables and inventory. In other words, companies are effectively "robbing Peter to pay Paul," relying on payment-term engineering rather than systemic process optimization.
The Receivables Crisis: The Largest Source of Untapped Value
The most concerning revelation from the 2026 report is the explosion of inefficiency within the accounts receivable (AR) function. AR now accounts for 40% of the total working capital opportunity, with the untapped value rising by a staggering 29% year-over-year to $773 billion.
In 40 out of the 50 industries analyzed by The Hackett Group, DSO worsened. Most alarmingly, aggregate receivables grew at 11%—nearly double the rate of revenue growth. This indicates that companies are not just struggling to collect cash; they are failing to manage the entire revenue-to-cash continuum.
"Receivables performance issues often originate long before an invoice becomes overdue," explains Gerhard Urbasch, associate principal at The Hackett Group. "The roots lie in credit decisions, order accuracy, billing quality, and dispute management. If a company treats collections as an isolated, end-of-process activity, they are doomed to repeat the cycle of inefficiency."
Inventory Buffering: A Strategic Choice or a Weakness?
Inventory also remains a significant drag, with the total opportunity rising to $616 billion. While this represents a 6% increase, analysts note that this is largely a symptom of the modern geopolitical and economic landscape. To mitigate tariff exposure, supply chain volatility, and the risks inherent in global sourcing, companies have intentionally held higher buffer stocks.
While this "resilience-first" strategy provides supply assurance, it comes at a steep price: increased balance sheet intensity. Companies are effectively choosing to trade liquidity for the comfort of having stock on hand, a decision that complicates the effort to streamline working capital in the face of ongoing global uncertainty.
Chronology of Inefficiency: A Multi-Year Retrospective
The 2026 survey provides a sobering timeline of corporate struggle. For the past several years, companies have fought to maintain liquidity, but the trend line suggests that sustaining progress is exceptionally rare.
- 2019–2021: The pre-pandemic era saw varied efforts to optimize working capital, though many firms struggled with the sudden shifts in global trade.
- 2022: The onset of intense supply chain disruptions forced companies to prioritize inventory over cash flow, causing a surge in DIO.
- 2023–2024: A period of volatility where payables were heavily manipulated to keep cash positions stable as interest rates rose.
- 2025 (The Current Data Set): Despite high profitability, the reliance on payables has reached a point of diminishing returns. The "excess" working capital relative to revenue hit its highest level on record, reversing three years of modest progress.
The rarity of long-term success is perhaps the most damning evidence. Of the 1,000 firms analyzed, only 98 managed to improve their CCC for three consecutive years. Even more exclusive, only nine companies achieved this for five years, and a mere two organizations managed seven consecutive years of improvement.
Official Responses and Strategic Implications
The leadership at The Hackett Group suggests that the solution is not a return to traditional, manual collection efforts, but a fundamental pivot toward AI-led transformation.
"The working capital challenge is increasingly becoming an AI opportunity," says Kathleen Wiedeman, senior director at The Hackett Group. "Leading organizations are not simply applying AI to existing, broken processes. They are redesigning end-to-end workflows across order-to-cash, forecast-to-fulfill, and purchase-to-pay."
The firm’s "AI World Class" research highlights a massive performance gap between laggards and those who have integrated AI into their decision-making. Organizations that embrace AI-enabled workflows demonstrate:
- 138% more automated credit decisions, reducing the human error that leads to late payments.
- 134% greater digital order intake, ensuring billing accuracy from the moment a sale is made.
- 89% more automated cash application, speeding up the reconciliation process.
- 85% fewer delinquent days, directly addressing the DSO deterioration seen across the broader market.
The Path Forward: Beyond "Quick Fixes"
The implication for CFOs and financial leaders is clear: the era of "easy growth" masking "sloppy operations" is coming to an end. As interest rates remain a factor and global markets grow more volatile, the cost of trapped capital will become increasingly expensive.
The Hackett Group’s analysis suggests that the organizations that will thrive in the coming years are those that stop viewing working capital as a finance-only problem. Instead, it must be treated as an enterprise-wide operational priority. This means aligning sales, supply chain, and finance teams under a single, data-driven strategy where AI handles the repetitive, error-prone tasks that currently clog the cash conversion cycle.
As organizations look toward the 2027 fiscal year, the message from the 2026 Working Capital Survey is unequivocal: sustainability in performance requires more than just scaling revenue. It requires the courage to dismantle inefficient legacy processes and replace them with the precision and speed of AI-driven digital workflows. Failure to do so will likely result in an ever-growing pile of "untapped value" that sits on the balance sheet, inaccessible and unproductive, while the company chases the next, increasingly difficult, revenue milestone.
About The Hackett Group, Inc.
The Hackett Group, Inc. (NASDAQ: HCKT) is an ROI-led, AI enterprise transformation firm that helps clients enable "AI World Class" performance. Its experts and engineers leverage proprietary platforms—including XT™, AIXelerator™, Hackett AI XPLR™, ZBrain®, and XDA™—to accelerate and enhance the delivery of consulting and business solutions. With a database of insights drawn from 98% of the Dow Jones Global Titans and 90% of the Fortune 100, the firm provides the gold standard in benchmarking and process intelligence. For more information, visit www.thehackettgroup.com.
