Hackett

Largest U.S. Cos Hit a Ceiling on Delaying Supplier Payments; Payables Challenges Drive Worsening of Working Capital Performance - Seite 2

Overall revenue growth continued to exceed normal levels in 2022, increasing by 15%, slower than last year but still far exceeding the 4% to 5% annual average growth pre-pandemic, the research found. Earnings before interest, taxes, depreciation and amortization (EBITDA) margins saw an unusual 3% decline in 2022, as raw material and labor pressure offset any gains in the last two years through digital transformation and other efforts. Cash on hand as a percentage of revenue also dropped by 19%, nearly returning to pre-pandemic levels, as companies used cash hoarded during the pandemic to improve operational performance and pay off debt.

The research, which looks at performance by company and by industry, found the strongest working capital improvements in several industries: airlines; hotels, restaurants and recreation; oil and gas; and wholesale distributors. Industries where companies saw the greatest degradation of working capital performance included: motor vehicles; semiconductors and equipment; computer hardware and peripherals; and household and personal care.

According to The Hackett Group Director Shawn Townsend, “After the ‘great working capital reset’ of 2021, this is a year of course correction and growth, despite significant challenges in the business environment. As we predicted in mid-2022, it appears that companies have reached an inflection point in their ability to improve their balance sheet by extending payments to suppliers. For a decade or more, this practice has been the easiest way for companies to improve their working capital performance, and companies have heavily relied on it. But now, supply assurance is a bigger challenge than ever for most companies, with many facing issues related to supplier criticality, competition for resources and the availability of supply.

“We expect this trend of worsening payables performance to continue in 2023, especially as the restructuring of several major regional banks will likely lead to less availability of supply chain finance assets,” said Townsend. “In addition, the new accounting disclosure rules introduced by the Financial Accounting Standards Board (FASB) requiring companies to disclose information about their supply chain finance programs has softened the demand for such tools.”