The Hackett Group, Inc (NASDAQ: HCKT), the leading Gen AI and strategic consultancy for digital transformation, presents alarming results and figures in its recently published working capital study “EU 1000 WC Results”: In 2024, a total of 1.4 trillion euros remained unused in the 1000 European companies surveyed – this corresponds to 14 percent of the total turnover of these companies. In 2023, the value of unused working capital potential was 1.3 trillion euros.

The main reasons for the deterioration in corporate creditworthiness are increasing payment terms, higher inventories and a challenging macroeconomic environment with falling sales and rising financing costs. The study shows in detail:

• The cash conversion cycle (CCC), i.e. the time between the procurement of raw materials and supplies and the receipt of cash for the sale of finished products and goods, increased by 3% year-on-year to 44.8 days.
• The DSO, the days sales outstanding, increased from 47 to 48 days.
• The DIO value, the days of inventory in stock, rose from 66 to 68.8 days, the highest value in the last 10 years.
• The days payable outstanding (DPO) improved by 3% from 70 to 72.6 days.

There are considerable differences between the European countries: German companies worsened their CCC score by 7 percent, the UK by 2 percent, while French and Nordic companies achieved slight improvements.

Tim Ross, Practice Lead Digital Procurement for Central Europe and Nordics at The Hackett Group, sees Gen AI as an “important tool for tapping into idle working capital to increase liquidity and thus avoid further credit costs”. However, this requires “considerable business discipline and the use of Gen AI and advanced analytics”, he continues. This is the only way to reduce the DSO 18-day gap between top performers and average companies: for example, by avoiding excessive warehousing and improving payment obligations as well as more consistent management along the entire source-to-pay and order-to-cash processes.

Digital procurement also plays a central role in this: “A large proportion of the structural drivers of working capital arise in purchasing – for example through order quantities, payment terms, supplier selection and PO discipline. Modern e-procurement and purchase-to-pay solutions, supported by Gen AI, make these levers transparent and actively controllable for the first time,” says Ross.

Gen AI and advanced analytics help with this:

• Receivables can be automated and accelerated, reducing late payments, identifying risks at an early stage and prioritizing dunning processes.
• Thanks to AI and optimized master data management, warehousing can provide precise forecasts and planning. This enables better inventory management and real-time production, even in the event of negative changes in the respective markets.
• Payables, i.e. payments to suppliers, can be optimized using Gen AI: Routines are automated, supplier relationship management is improved and liquidity is maintained without disrupting supply chain management. In combination with e-procurement platforms, payment targets, discount potential and supplier conditions can be systematically analyzed and improved.

European finance executives have recognized the importance of “consistent working capital management – especially in times of global tensions, falling sales and rising interest rates,” says Tim Ross. This is also confirmed by the Hackett Group’s Key Issues Study 2025: optimizing working capital is number one on the finance agenda of the companies surveyed.