Working Capital Efficiency: How AI and Automation Drive Growth for Middle-Market Manufacturers

For middle-market manufacturing firms, the ability to efficiently manage working capital – the lifeblood of daily operations – is no longer simply a back-office concern. It’s a strategic lever for growth, resilience and opportunistic investment. A recent benchmark study reveals a significant shift, with companies increasingly leveraging technology, particularly artificial intelligence (AI), to optimize cash flow and unlock capital.

The Rise of Working Capital as a Growth Driver

Traditionally, working capital management focused on maintaining adequate reserves, timely supplier payments, and swift customer collections – a defensive posture aimed at preventing problems. However, the 2026 Growth Corporates Working Capital Index (WCI) demonstrates a move towards a more proactive approach. The WCI, based on interviews with nearly 1,500 CFOs and treasurers across five global regions and ten industry sectors, shows that firms are now deploying liquidity strategically to fund growth initiatives, negotiate better pricing, and capitalize on acquisitions.

What High-Performing Firms Do Differently

The WCI scores firms with annual revenue between $50 million and $1 billion based on their ability to convert business activity into usable cash. Top performers aren’t necessarily larger or better capitalized; they’ve built deliberate systems for faster collections, smarter payment strategies, and real-time visibility into their cash position. Notably, efficiency scores have risen across all tiers for three consecutive years, indicating that even lower-performing firms are closing the gap through the adoption of better tools and information.

Companies utilizing structured working capital solutions report meaningful annual savings, with some capturing nearly $20 million. This level of efficiency transforms working capital management from a cost center into a strategic asset.

The Impact of AI on Cash Flow Predictability

One of the most significant findings of the 2026 WCI is the transformative impact of AI. Among low-performing firms that adopted AI for working capital management, cash flow unpredictability plummeted from 68% to 17%. This represents a fundamental shift in operational capability, allowing businesses to predict their cash flow with over 80% accuracy. Currently, six in ten CFOs and treasurers are using AI to improve working capital efficiency.

AI’s power lies in its ability to process vast amounts of transaction data, payment histories, and market signals, identifying patterns and predictions that would otherwise remain hidden. However, AI is only as effective as the data it receives; fragmented systems and disconnected spreadsheets can hinder its performance.

Commercial Cards and Virtual Cards: Versatile Tools for Cash Management

Commercial cards are increasingly recognized as versatile instruments for working capital optimization. Over half of CFOs and treasurers now use card acceptance as a primary strategy to reduce Days Sales Outstanding (DSO), while 15% leverage corporate cards to manage Days Payable Outstanding (DPO). Virtual cards, with their programmability – allowing for specific vendor limits and single-use transactions – are gaining traction as a cash management tool integrated with Enterprise Resource Planning (ERP) systems.

Addressing Barriers to Adoption

Despite the broad gains in working capital efficiency, challenges remain. Loan rejection rates have risen in some middle-market categories, and a mismatch between finance team needs and available solutions persists. These gaps aren’t solely technological; human factors, such as a lack of institutional standing for novel treasurers or unfamiliarity with supply chain finance among CFOs, can also impede adoption.

The Importance of Benchmarking and Continuous Improvement

The WCI provides a valuable benchmark for firms to assess their working capital position against peers and identify areas for improvement. This data-driven approach fosters a conversation focused on how to improve, rather than whether to improve. The trend of rising scores suggests that middle-market firms are increasingly recognizing working capital not as a balance sheet item to be managed conservatively, but as an operational capability to be built deliberately.

The key takeaway is that the cash is available; the challenge lies in having the visibility, tools, and strategy to effectively deploy it.