Hackett: €1.3 Trillion in Untapped Working Capital Opportunity for European Companies
The Hackett Group's European Working Capital Survey reveals a €1.3 trillion opportunity in untapped working capital for European companies. Key metrics show mixed performance: Days inventory outstanding worsened by 5% to 66 days, days sales outstanding improved slightly by 0.2% to 47 days, and days payables outstanding increased by 2% to 70 days. The cash conversion cycle deteriorated by 4% to 44 days.
Companies face challenges with high interest rates and economic uncertainties, reflected in declining operational metrics: cash to current liability ratio dropped from 0.31 to 0.28, while total debt increased from 40% to 43% of revenue. The survey highlights Generative AI as a important technology for optimizing working capital management through improved cash flow forecasting and inventory optimization.
Il sondaggio sulla gestione del capitale circolante europeo condotto dal Gruppo Hackett rivela un'opportunità di 1,3 trilioni di euro nel capitale circolante non sfruttato per le aziende europee. Le metriche chiave mostrano prestazioni miste: i giorni di giacenza delle scorte sono peggiorati del 5% a 66 giorni, i giorni di incasso delle vendite sono leggermente migliorati dello 0,2% a 47 giorni e i giorni di pagamento sono aumentati del 2% a 70 giorni. Il ciclo di conversione della liquidità è peggiorato del 4% a 44 giorni.
Le aziende affrontano sfide legate ai tassi di interesse elevati e alle incertezze economiche, come evidenziato dal calo delle metriche operative: il rapporto liquidità a passività correnti è sceso da 0,31 a 0,28, mentre il debito totale è aumentato dal 40% al 43% dei ricavi. Il sondaggio evidenzia l'Intelligenza Artificiale Generativa come una tecnologia importante per ottimizzare la gestione del capitale circolante attraverso una migliore previsione dei flussi di cassa e l'ottimizzazione dell'inventario.
La encuesta sobre el capital de trabajo europeo del Grupo Hackett revela una oportunidad de 1,3 billones de euros en capital de trabajo no aprovechado para las empresas europeas. Las métricas clave muestran un rendimiento mixto: los días de inventario han empeorado un 5% a 66 días, los días de cuentas por cobrar han mejorado ligeramente un 0,2% a 47 días y los días de cuentas por pagar han aumentado un 2% a 70 días. El ciclo de conversión de efectivo se ha deteriorado un 4% a 44 días.
Las empresas enfrentan desafíos con tasas de interés altas e incertidumbres económicas, reflejadas en la disminución de las métricas operativas: la relación de efectivo a pasivos corrientes ha caído de 0,31 a 0,28, mientras que la deuda total ha aumentado del 40% al 43% de los ingresos. La encuesta destaca la Inteligencia Artificial Generativa como una tecnología importante para optimizar la gestión del capital de trabajo mediante la mejora de la previsión de flujos de efectivo y la optimización del inventario.
해켓 그룹의 유럽 자본 운용 조사에 따르면 유럽 기업들은 1.3 조 유로의 기회가 있는 자본 운용 문제를 안고 있습니다. 주요 지표들은 혼합된 성과를 보이고 있습니다: 재고 회전일수는 5% 나빠져 66일이 되었고, 매출 채권 회전일수는 0.2% 상승해 47일이 되었으며, 매입 채무 회전일수는 2% 증가해 70일이 되었습니다. 현금 전환 주기는 4% 악화되어 44일입니다.
기업들은 높은 금리와 경제적 불확실성에 직면해 있으며, 이는 운영 지표의 감소로 나타납니다: 유동자산 대비 유동부채 비율이 0.31에서 0.28로 떨어졌고, 총 부채는 매출의 40%에서 43%로 증가했습니다. 조사는 현금 흐름 예측과 재고 최적화를 통해 자본 운용 관리를 최적화하는 중요한 기술로 생성적 AI를 강조합니다.
L'enquête sur le fonds de roulement européen du Hackett Group révèle une opportunité de 1,3 trillion d'euros en fonds de roulement inexploités pour les entreprises européennes. Les principales mesures montrent des performances variées : les jours de stock ont empiré de 5 % à 66 jours, les jours de créances clients ont légèrement augmenté de 0,2 % à 47 jours, et les jours de dettes fournisseurs ont augmenté de 2 % à 70 jours. Le cycle de conversion de trésorerie s'est détérioré de 4 % à 44 jours.
Les entreprises font face à des défis liés à des taux d'intérêt élevés et à des incertitudes économiques, ce qui se reflète dans la baisse des indicateurs opérationnels : le ratio de liquidités sur dettes à court terme est tombé de 0,31 à 0,28, tandis que la dette totale est passée de 40 % à 43 % du chiffre d'affaires. L'enquête souligne l'importance de l'IA générative comme technologie pour optimiser la gestion des fonds de roulement grâce à une meilleure prévision des flux de trésorerie et à l'optimisation des stocks.
Die europäische Working Capital-Umfrage der Hackett Group zeigt eine Chance von 1,3 Billionen Euro an ungenutztem Working Capital für europäische Unternehmen. Die Schlüsselmesswerte zeigen gemischte Ergebnisse: Die Lagerbestandstage verschlechterten sich um 5% auf 66 Tage, die Forderungen aus Lieferungen und Leistungen verbesserten sich leicht um 0,2% auf 47 Tage, und die Verbindlichkeiten aus Lieferungen und Leistungen stiegen um 2% auf 70 Tage. Der Cash Conversion Cycle verschlechterte sich um 4% auf 44 Tage.
Unternehmen sehen sich Herausforderungen durch hohe Zinssätze und wirtschaftliche Unsicherheiten gegenüber, die sich in sinkenden Betriebskennzahlen widerspiegeln: Das Verhältnis von Bargeld zu kurzfristigen Verbindlichkeiten fiel von 0,31 auf 0,28, während die Gesamtverschuldung von 40% auf 43% des Umsatzes anstieg. Die Umfrage hebt Generative KI als wichtige Technologie zur Optimierung des Working Capital-Managements durch verbesserte Cashflow-Prognosen und Lageroptimierung hervor.
- Identified €1.3 trillion in potential working capital optimization opportunity
- Days sales outstanding improved by 0.2% to 47 days
- Days payables outstanding increased by 2% to 70 days
- Cash on hand increased by 3% to 12% of revenue
- Days inventory outstanding worsened by 5% to 66 days
- Cash conversion cycle deteriorated by 4% to 44 days
- Cash to current liability ratio declined from 0.31 to 0.28
- Total debt increased from 40% to 43% of revenue
Insights
The identification of a
The widening performance gap between top-quartile and median companies is particularly noteworthy. With top performers converting cash five times faster than median companies, this creates a competitive advantage moat that could significantly impact market positions. The increase in total debt to
For HCKT, this market dynamic presents a substantial business opportunity as companies seek solutions to optimize working capital. The focus on Gen AI capabilities positions them favorably in the consulting space for working capital optimization services.
The emergence of Gen AI as a critical tool for working capital management marks a pivotal shift in financial operations technology. The technology's application in cash flow forecasting, inventory optimization and demand planning represents a new frontier in working capital efficiency.
The ability to process vast amounts of data for predictive analytics in real-time will revolutionize how companies manage their working capital. This technological advancement is particularly relevant given the complexity of modern supply chains and the need for precise inventory management. For HCKT, being at the forefront of this AI integration positions them strategically in a high-growth market segment.
Gen AI emerging as key technology to diligently manage working capital performance
The European Union’s economy demonstrated resilience initially, but ongoing geopolitical tensions and soaring consumer prices led to a substantial slowdown in the latter half of 2023. Data from Europe’s leading companies show mixed changes in key working capital metrics. Days inventory outstanding (DIO) worsened by
Industries reliant on energy from fossil fuels faced significant challenges and reverted to strategic buying to secure energy supplies and mitigate cost increases amid geopolitical turmoil. This preemptive inventory buildup led to a notable increase in DIO for these sectors.
“This trend presents a considerable concern for European businesses since macroeconomic uncertainties and inflationary pressures are expected to continue, adding external strain to working capital management,” said Istvan Bodo, director of Strategy and Operations at The Hackett Group. “Persistent high interest rates have significantly increased the cost of holding money trapped in working capital compared to previous years.”
Equally troubling is the decline in operational and liquidity metrics. The report highlights a decrease in the average cash to current liability ratio from 0.31 to 0.28, along with an increase in total debt as a percentage of revenue from
The survey also records a widening performance gap between top performers and median companies. Upper-quartile companies are now converting cash more than five times faster than median performers, emphasizing the necessity for businesses to manage their financial resources prudently to remain competitive.
The survey identified
“This widening performance gap accentuates the need for European businesses to manage their working capital diligently,” added Bodo. “Leading companies will harness advanced technologies like Gen AI to forecast cash flow with greater accuracy, optimize inventory levels in line with fluctuating customer demand and enhance just-in-time sourcing strategies.”
In the face of persistent geopolitical uncertainty, moderate return to economic growth and high interest rates, the need for effective working capital management is more critical than ever. With the transformation generative artificial intelligence (Gen AI) will have on business operations, organizations must target and prioritize Gen AI capabilities to optimize the cash collection and accounts payable cycles, and better anticipate customer demand and inventory needs.
Gen AI will provide new enablement opportunities to enhance working capital management across the board. Leading businesses will use Gen AI to improve cash flow forecasting accuracy, predict optimal inventories that meet ever-changing customer demand, develop more robust just-in-time sourcing demand planning and more. Determining an organization’s AI opportunities and readiness is the first step to unlock and properly deploy the tremendous potential of Gen AI.
About The Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT) is an IP and platform-based, Gen AI strategic consulting and executive advisory firm that enables Digital World Class® performance. Using AI XPLR™ and ZBrain™ – our ideation through implementation platforms – our experienced professionals help organizations realize the power of Gen AI and achieve quantifiable, breakthrough results, allowing us to be key architects of their Gen AI journey.
Our expertise is grounded in unparalleled best practices insights from benchmarking the world’s leading businesses – including
For more information on The Hackett Group, visit: https://www.thehackettgroup.com/ or email media@thehackettgroup.com.
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Cautionary Statement Regarding “Forward-Looking” Statements
This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including without limitation, words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or other similar phrases or variations of such words or similar expressions indicating, present or future anticipated or expected occurrences or outcomes are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that may impact such forward-looking statements include without limitation, the ability of The Hackett Group to effectively market its digital transformation, our ability to transition our capabilities to support generative artificial intelligence (AI)-related consulting services and solutions and other consulting services, our ability to effectively integrate acquisitions, including the LeewayHertz acquisition into our operations, our ability to manage joint ventures and successfully cooperate with our joint venture partners, competition from other consulting and technology companies that may have or develop in the future, similar offerings, the commercial viability of The Hackett Group and its services as well as other risk detailed in The Hackett Group’s reports filed with the United States Securities and Exchange Commission. The Hackett Group does not undertake any duty to update this release or any forward-looking statements contained herein.
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Source: The Hackett Group, Inc.
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