Working Capital Opportunity: What Small Firms Should Copy

A working capital opportunity is cash you earned but have not collected, cash parked in stock, or cash you pay out sooner than you need to. The Hackett Group puts that gap at $1.94 trillion for large North American companies. Small firms can find theirs with three numbers.

What the $1.94 trillion figure actually measures

On October 5, 2026, The Hackett Group published its 2026 North American Working Capital Survey. It looked at the FY2025 results of the 1,000 largest nonfinancial public companies in North America and estimated how much cash they could release if they managed receivables, inventory and payables as well as top performers do. The answer was $1.94 trillion, up 12% on the prior year, according to the Hackett news release.

The surprising part is that this happened in a good year. The same release reports revenue up 6% to $17.6 trillion, operating cash flow at a 13-year high of 17% of revenue, and EBITDA margins at 21%. Profits went up, and so did the amount of cash stuck inside the business for every dollar of sales.

If that sounds familiar, it should. It is the same trap many founders fall into on a smaller scale: the income statement looks healthy while the bank balance keeps getting tighter. We covered the basic mechanics in Profit vs Cash Flow: Why Profitable Companies Go Broke. The Hackett data simply shows that very large companies are not immune either.

Why a small firm should care about a big-company survey

You do not run a Fortune 1000 company, so why read their numbers? Because the cash leaks are the same, just smaller. Every business that sells on credit, holds stock or pays suppliers has the same three levers. The difference is that a large company with a slow quarter can borrow cheaply, while a 20-person firm with a slow quarter can miss payroll.

The survey also shows how easy it is to hide a problem inside an average. Hackett reports that the overall cash conversion cycle improved by only 0.2 days, to 38.4 days. That sounds stable. Underneath, days sales outstanding got worse by 2.1 days and days inventory outstanding by 0.6 days, while days payable outstanding improved by 2.9 days. In plain terms, companies were collecting more slowly and holding more stock, and they covered it up by paying their suppliers later.

CFO.com's coverage of the survey adds that the total opportunity grew from $1.73 trillion in 2024 to $1.94 trillion in 2025. A single headline metric that looks flat can hide a lot of movement. The same is true of your own cash balance.

Lesson one: receivables are where the cash is hiding

Receivables were the biggest story in the survey. According to Hackett, the accounts receivable opportunity rose 29% year over year to $773 billion, which is 40% of the total. Days sales outstanding worsened for the third year in a row and got worse in 40 of the 50 industries analysed. Aggregate receivables grew 11%, nearly twice as fast as revenue.

That last point is the one to copy. If your receivables are growing faster than your sales, you are financing your customers. A quick test you can run today:

• Take total receivables at the end of this month and the same month last year.
• Take revenue for the last three months and the same period last year.
• If receivables grew faster than revenue, your collections are slipping, even if no single invoice looks alarming.

Hackett also makes a useful point about where receivable problems start. The release lists credit decisions, negotiated payment terms, order accuracy, billing quality, dispute management and cash application as the drivers, and argues that fixing the whole chain works better than pushing harder on collections alone. For a small firm, that usually means a few unglamorous habits:

• Invoice the day the work is delivered, not at the end of the month.
• Check every invoice against the order before it goes out, because a wrong invoice is a late invoice.
• Agree payment terms before the work starts and write them on the invoice.
• Log disputes the day they arrive and give each one an owner.

An aging report shows you which customers are drifting before it becomes a crisis. Our guide to accounts receivable aging walks through how to read one.

Lesson two: inventory buffers cost real cash

The second lever is stock. Hackett says the inventory opportunity rose 6% to $616 billion as companies kept carrying buffer stock to manage tariff exposure, supply chain uncertainty and the shift to new suppliers. CFO.com reports that the average time companies held goods grew to 56 days, and quotes Hackett associate principal Gerhard Urbasch describing a move "from just in time to just in case."

There is nothing wrong with safety stock. Running out of a best seller can cost more than holding a few extra weeks of it. The mistake is letting buffers grow by default, without anyone deciding how much protection is worth paying for. Every extra day of inventory is cash that is not available for payroll, marketing or a slow month.

Practical steps for a small business:

• List your top 20 items by value on hand and check how many weeks of sales each one covers.
• Set a target for each one, on purpose, and review it monthly.
• Treat slow movers as a cash problem, not just a warehouse problem: discount, bundle or return them.

If you want the formula behind this, see Inventory Turnover Ratio and the Cash It Traps.

Lesson three: paying later is not a strategy on its own

Payables were the only area that improved. Hackett reports that the payables opportunity stayed roughly stable at $548 billion, days payable outstanding reached its best level since 2021, and supply chain finance settlement volumes rose 35% year over year. Yet the release concludes that extending payment terms alone is unlikely to be a sustainable path to further improvement.

For a small firm, the warning is even stronger. Your suppliers are often small businesses too. Paying them late can cost you early payment discounts, priority on scarce stock and goodwill when you need a favour. Negotiate terms that match your own collection cycle, then pay on time. Do not use stretched payables to cover slow collections and growing stock, which is exactly the pattern the survey found.

Why one good year is not enough

The survey's most humbling number is about consistency. Of the 1,000 companies Hackett analysed, only 98 improved their cash conversion cycle three years in a row, just nine kept improving for five years, and only two managed seven straight years.

The lesson for a founder is that working capital is a habit, not a project. A one-off collections push or a stock clearance sale produces a nice month. Keeping cash flowing needs a short list of numbers you look at every week, with someone responsible for each one.

Three numbers to put on your dashboard

You do not need a survey team to find your own working capital opportunity. You need three numbers, tracked monthly:

| Number | What it tells you | Warning sign | |---|---|---| | Days sales outstanding | How long customers take to pay | Rising for two or more months | | Days inventory outstanding | How long stock sits before it sells | Growing faster than sales | | Days payable outstanding | How long you take to pay suppliers | Rising only because you are short of cash |

Add the first two and subtract the third, and you have your cash conversion cycle. Watch the parts, not just the total, because the Hackett data shows a stable total can hide two of the three moving the wrong way.

FAQ

What is a working capital opportunity?

It is the cash a business could release by collecting from customers, holding stock and paying suppliers as efficiently as strong peers do. The Hackett Group estimates it for large companies by benchmarking receivables, inventory and payables against top performers.

Does the $1.94 trillion figure apply to small businesses?

No. It covers the 1,000 largest nonfinancial public companies in North America. The patterns behind it, slower collections, bigger buffers and later payments, are common in small firms too, which is why the lessons travel.

How do I calculate my cash conversion cycle?

Add days sales outstanding and days inventory outstanding, then subtract days payable outstanding. A service business with no stock can use days sales outstanding minus days payable outstanding.

Which lever should a small business fix first?

Usually receivables. In the Hackett survey they were the largest and fastest-growing part of the opportunity, and small firms often have the most control there through faster, more accurate invoicing.

Is paying suppliers later a good way to free up cash?

Only up to a point. Hackett's own conclusion is that extending payment terms alone is not a sustainable path. It can also damage supplier relationships that a small business depends on.

How often should I review working capital?

Monthly at minimum, and weekly if cash is tight. The survey shows that very few companies sustain improvement, so a regular review habit matters more than a one-off clean-up.

See your own cash conversion cycle live

The biggest companies in North America left a record amount of cash on the table in a year when profits looked great. Make sure your business is not doing the same thing on a smaller scale. Connect your numbers and get a live cash-flow dashboard in Biztrics and watch receivables, inventory and payables move every week, not once a quarter.