TLDR: The Hackett Group’s 2025 U.S. Working Capital Survey reveals a 4% improvement in the cash conversion cycle (CCC) to 37 days, primarily due to a 3% increase in days payable outstanding (DPO). Despite this, $1.7 trillion remains trapped in excess working capital. The report highlights generative AI as a crucial tool for optimizing working capital, especially in addressing persistent challenges in receivables and inventory management.
MIAMI – The Hackett Group, Inc. (NASDAQ: HCKT), a prominent generative artificial intelligence (Gen AI) consultancy and executive advisory firm, has released the findings of its 2025 U.S. Working Capital Survey. The report indicates a significant 4% improvement in the cash conversion cycle (CCC), now standing at 37 days, following a period of widespread deterioration. This positive shift is largely attributed to a 3% improvement in days payable outstanding (DPO), which has rebounded to 59 days, signaling renewed opportunities for companies to unlock liquidity amidst ongoing economic uncertainties.
Despite this progress, the survey, based on an analysis of the top 1,000 U.S. publicly traded nonfinancial companies, reveals that a substantial $1.7 trillion remains trapped in excess working capital. This figure represents 35% of gross working capital and 11% of aggregate revenue. While DPO has shown a strong rebound, both days sales outstanding (DSO) and days inventory outstanding (DIO) have slightly worsened. This trend reflects broader macroeconomic volatility, cautious inventory strategies adopted by businesses, and evolving customer dynamics. Accounts receivable, in particular, continue to pose challenges, with an estimated $600 billion tied up due to an 18-day DSO gap between top and median performers.
István Bodó, senior director of Transformation Finance at The Hackett Group, emphasized the strategic importance of working capital optimization in the current economic climate. “Amid high interest rates and growing tariff risks, the working capital opportunity is more strategic than ever,” said Bodó. “Top-performing companies are proving that optimizing payables, receivables and inventory is not just a cost play – it’s a critical lever for improving liquidity and investing in growth. With Gen AI, we now have enhanced tools to tackle working capital inefficiencies in smarter, more scalable ways.”
The survey highlights the transformative potential of generative AI in optimizing working capital. The Hackett Group, a leading Gen AI consultancy, underscores that AI can help unlock the $1.7 trillion in excess working capital by improving processes, forecasting, and cash flow management. Companies are increasingly investing in AI infrastructure, with capital expenditures rising 5% as part of broader efforts to enhance supply chain resilience.
Additional insights from the report include:
Aggregate revenue for the surveyed companies rose by 4% in 2024, primarily driven by innovation-led sectors such as semiconductors (+28%) and internet software and services (+14%).
Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin climbed to 19%, a 6% improvement, largely due to effective cost optimization efforts.
Operating cash flow as a percentage of revenue improved to 16%, aided by lower cost of goods sold and better working capital practices.
While many industries showed gains, the computer hardware and peripherals sector experienced a notable decline in CCC. This was attributed to overproduction linked to AI demand and ongoing trade uncertainties, leading to inventory issues. Conversely, industries like semiconductors and equipment saw a 6% CCC improvement (supported by an 18% DPO increase), textiles, apparel, and footwear improved CCC by 10% (with a 22% DPO increase), and utilities achieved a significant 34% CCC improvement (driven by a 13% DPO increase).
Also Read:
- Cincinnati Financial Firms Harness AI for Enhanced Efficiency and Cost Reduction
- APAC CFOs Anticipate Substantial Revenue Boost from AI Agents as Adoption Surges Across Southeast Asia
The report underscores that while progress has been made in payables, a systemic integration of AI with financial operations is crucial for addressing the persistent challenges in receivables and inventory management, enabling more precise forecasting and decision-making.
