MIAMI, FL – On the surface, the fiscal year 2025 financial statements of North America’s 1,000 largest public companies paint a picture of robust health. Revenue grew by 6% to hit a staggering $17.6 trillion, while EBITDA margins climbed to 21% and operating cash flow reached a 13-year high. Yet, beneath these glossy headline figures lies a troubling trend that threatens long-term corporate agility: a massive, growing inefficiency in working capital.
According to the 2026 North American Working Capital Survey, released today by The Hackett Group, Inc. (NASDAQ: HCKT), these corporations are currently sitting on a record $1.94 trillion “working capital opportunity”—a measure of liquidity that remains trapped within inefficient internal processes. This figure represents a 12% increase from the previous year, signaling that while companies are successfully generating sales, they are increasingly struggling to convert those sales into cash.
The Core Conflict: Growth vs. Efficiency
The paradox of the current economic environment is stark. For three consecutive years, North American firms had shown steady improvement in managing their working capital. The 2026 report marks a definitive reversal of that trend. Excess working capital relative to revenue has now reached its highest level on record, proving that strong top-line growth can mask structural decay in the back office.
"The headline numbers suggest many organizations had a very successful year, but a closer look shows a different story," explained 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."
The data suggests that corporations have been relying on isolated initiatives—such as aggressive payment term negotiations—to balance their books, rather than fixing the fundamental, end-to-end processes that govern the flow of capital from order to receipt.
Chronology of a Growing Bottleneck
To understand how the current $1.94 trillion hole was dug, one must look at the recent evolution of the Cash Conversion Cycle (CCC).
- 2023-2024: Organizations benefited from a focus on supply chain resilience and aggressive cash management, leading to three years of moderate improvement in CCC.
- Early 2025: As inflation stabilized and demand remained steady, companies shifted focus toward aggressive revenue expansion. This rapid growth inadvertently put pressure on billing and collection departments that were not scaled to handle the increased volume.
- Late 2025: The surge in receivables began to outpace revenue growth significantly. While companies were busy booking new business, the administrative burden of managing that business—credit checks, billing accuracy, and dispute resolution—began to falter.
- October 2026: The Hackett Group’s findings confirm that the slight improvement in the aggregate CCC (a mere 0.2-day gain to 38.4 days) was a mirage. It was driven entirely by an artificial extension of payables, which masked a significant deterioration in receivables and inventory management.
Supporting Data: Where the Money Is Trapped
The breakdown of the $1.94 trillion opportunity reveals exactly where the friction lies in modern corporate operations.
1. The Receivables Crisis
Accounts receivable (AR) has emerged as the primary villain. The AR opportunity ballooned by 29% year-over-year, reaching $773 billion. This represents 40% of the total working capital opportunity. Notably, Days Sales Outstanding (DSO) worsened for the third consecutive year, deteriorating across 40 of the 50 industries analyzed. Alarmingly, aggregate receivables grew by 11%—nearly double the pace of total revenue growth.
2. The Inventory Buffer
Inventory remains a significant drag on liquidity, accounting for a $616 billion opportunity. This represents a 6% increase, driven largely by firms prioritizing supply chain reliability over lean balance sheets. In the wake of global tariff volatility and persistent supply chain uncertainty, companies have opted to carry excess "buffer stock" to ensure product availability. While this provides a hedge against disruption, it is a costly strategy that increases balance sheet intensity.
3. The Payables Mirage
Payables was the only area of the cycle to show genuine improvement, with Days Payable Outstanding (DPO) reaching its best level since 2021. The survey found a 35% increase in supply chain finance activity, suggesting that firms are increasingly utilizing third-party financing to stretch their payment terms. However, experts warn that this is a fragile strategy. "Extending payment terms alone is unlikely to provide a sustainable path to future improvement," the report notes.
Sustainability and the "Long-Term Trap"
Perhaps the most damning evidence of systemic failure is the inability of organizations to sustain progress. Of the 1,000 companies analyzed:
- 98 companies improved their CCC for three consecutive years.
- 9 companies managed to sustain that improvement for five years.
- Only 2 organizations achieved seven straight years of improvement.
This volatility suggests that most corporate working capital "victories" are the result of temporary cost-cutting measures or one-time strategic pivots rather than the adoption of durable, optimized workflows.
The AI Imperative: A New Path Forward
The Hackett Group identifies a potential solution to this mounting crisis: the integration of process-led artificial intelligence (AI). The firm’s "AI World Class" research suggests that organizations that redesign their workflows around AI-enabled decision-making achieve vastly superior outcomes compared to those merely layering AI onto existing, broken processes.
By implementing AI across the order-to-cash (O2C) cycle, companies can realize:
- 138% more automated credit decisions, reducing human bottlenecks.
- 134% greater digital order intake, minimizing errors from the point of entry.
- 89% more automated cash application, speeding up the reconciliation of payments.
- 85% fewer delinquent days, significantly lowering the cost of collections.
Kathleen Wiedeman, senior director at The Hackett Group, emphasizes that this is not about simple automation. "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. That’s where we see the greatest potential to improve cash flow, increase productivity, and sustain performance gains over time."
Implications: The Road Ahead
The implications for North American corporations are clear. As interest rates remain a factor and global economic conditions stay unpredictable, the "low-hanging fruit" of extending payment terms is reaching its limit. The $1.94 trillion opportunity is a massive reservoir of internal capital that could be used for R&D, dividends, or debt reduction if only the conversion processes were optimized.
For the CFO, the mandate is no longer just about driving growth—it is about ensuring that growth does not come at the expense of liquidity. The companies that will thrive in the latter half of the decade will be those that view their working capital cycle not as a series of administrative tasks, but as a critical, AI-driven engine of enterprise value.
Without a fundamental shift in how revenue is processed—from the initial credit check to the final payment application—the "strong" financial performance of today may quickly become the structural burden of tomorrow. The data serves as a stark warning: the era of hiding inefficiencies behind top-line growth is coming to a close.
