Working capital used to be a topic reserved for controllers, supply chain managers, and the occasional CFO who couldn’t understand why cash never matched EBITDA. In 2025, that world is gone.
Liquidity has become a strategic battleground.
Interest rates are still high.
Supply chains remain fragile.
Regulators are tightening their grip.
Global economies show wildly different cash-conversion patterns.
And treasurers, whether they like it or not, now sit at the intersection of all of it.
We were at the Amsterdam working capital forum 2025, and we saw three different presentations which paint the same picture:
- Most companies still run working-capital programmes far below their potential
- Working capital is a value engine, not a cost bucket, and most firms measure it wrong
- Liquidity metrics are deteriorating across sectors and economies, and volatility is here to stay
Put together, they show a single reality:
“Treasury must lead the next phase of working-capital transformation.”
The Reality Gap: Companies Claim to Be Strategic, but the Data Shows Otherwise
One leadership survey shows something quiet embarrassing: most companies believe they are “strategists” when it comes to working capital, but only a fraction of those organisations operate like true champions.
The differences between the two groups are unmistakable:
Champions
- Integrate working capital into long-term value creation
- Review metrics weekly
- Track the full suite of KPIs; not just the comfortable ones
- Diversify programme funding instead of relying on a single bank
Everyone Else
- Treat working capital as a quarterly clean-up exercise
- Review performance monthly or even quarterly
- Cherry-pick politically convenient KPIs
- Depend on one bank for programme funding
And treasurers recognise these patterns immediately. Every liquidity forecast reveals the same issues:
- Missing invoice discipline
- Slow dispute handling
- Bloated safety stock
- Inconsistent supplier terms
- Siloed decision-making
“Treasury holds the mirror. Whether the organisation wants to look in it or not is the issue.”
The value engine: profitability without capital efficiency is meaningless
The second presentation highlighted an even more fundamental truth about financial performance. You cannot meaningfully assess a company’s results without connecting profitability to capital efficiency. Looking at margin or EBIT in isolation simply doesn’t tell the full story.
- Inventory turns influence performance just as much as margin.
- DSO affects value creation just as much as revenue growth.
- Capital employed shapes ROCE just as much as EBIT does.
Two companies may report identical profitability, yet deliver very different economic outcomes depending on how efficiently they manage inventory, payables, and receivables.
Some organisations generate value by balancing margin discipline with strong working capital efficiency. Others quietly erode value, because every euro of profit ends up stuck in slow-moving stock, overdue receivables, or asset-heavy operations.
Treasury experiences this reality long before it shows up in the KPIs.
The symptoms are familiar:
- Rising funding requirements
- Heavier reliance on revolver facilities
- Cash-flow timing becoming harder to predict
- CFOs asking why “cash is lagging” despite good P&L results
- Ratings agencies watching capital-employed metrics with increasing attention
These are not isolated operational issues… They are the financial consequences of weak capital efficiency.
“Optimising working capital isn’t about squeezing suppliers or chasing customers harder. It’s about designing a system where profit turns into cash, not accounting entries”
The reality check: global working capital metrics are moving in the wrong direction
The third presentation delivers the punchline: globally, working-capital performance is under pressure in many economies.
A few examples from the 2020 -2024 data:
- Cash conversion cycles worsened significantly in countries like Russia (+25 days) and Italy (+24 days).
- Sectors like healthcare, materials, industrials, and consumer goods show persistently high DSO and DIO.
- Smaller companies consistently perform worse across all metrics, due to weaker negotiation power and less automation.
- Even the strongest economies contain sectors where performance is starting to slip.
All of this bleeds into treasury operations:
- Liquidity buffers grow far beyond normal levels.
- FX exposure timing becomes unpredictable
- Cross-border pooling becomes harder
- Funding costs increase
- Forecasts lose accuracy
“Treasury becomes the shock absorber… even though treasury didn’t cause the instability.”
Why Treasury Must Take A leadership Role
Across all three sets of insights, one theme repeats: “Treasury is the only function with visibility across liquidity, risk, funding, and operational drivers.”
Treasury sees the full picture: the cost of holding excess inventory, the funding pressure created by slow receivables, the supply-chain risk that comes with stretching payables, the way working-capital swings distort FX flows, and the downstream impact all of this has on covenants, ratings, and short-term liquidity facilities. Working capital is no longer an “operations topic” – it is a balance-sheet stability issue.
“Treasury is the balance-sheet owner.”
What Leading Organisations Do Differently
When you look across all three perspectives, high performers follow the same blueprint:
- Working capital is strategic: Not a cost line or a KPI, but a driver of ROCE and liquidity stability.
- Balance margin and capital efficiency: Cash generation is managed in two dimensions, not one.
- Centralised governance, but local execution: Treasury sets the framework; business units deliver within it.
- Cash culture is embedded across the organisation: Commercial, supply chain, and finance all understand their impact.
- Technology and automation do the heavy lifting: Less friction in invoicing, collections, matching, forecasting, and disputes.
- The supply chain is optimised end-to-end: DPO isn’t “free money”; inventory isn’t just an ops decision.
- Funding is diversified: Programmes use multiple bank and non-bank sources, not a single lender.
Across every one of these elements, treasury sits at the centre.
The Treasurer’s Playbook for 2025
Treasury can drive the next evolution through five moves:
- Create unified governance: Bring AR, AP, supply chain, sales, and finance into one operating rhythm.
- Move to weekly visibility: Daily cash + weekly working capital updates = real forecasting accuracy.
- Diversify working-capital funding: Use SCF, receivables finance, dynamic discounting, and non-bank options.
- Shift KPIs from “targets” to “value boundaries”: Stop chasing DSO or DIO in isolation; measure value creation instead.
- Use technology to remove liquidity friction: Automation and predictive tools reduce buffer needs and volatility.
“Treasury doesn’t fix working capital alone. Treasury orchestrates it.”
Final Thought: This Is Treasury’s Moment
Working capital is no longer about “improving DSO by three days.”
It’s about building a resilient liquidity engine in a world where volatility is the new normal.
The organisations that thrive will be the ones where treasury steps forward, connects the dots, and turns working capital into a source of stability, value, and strategic advantage.
If the treasury doesn’t lead it, no one will.
A Small Pecunia Note
If you’re ready to improve working-capital discipline, tighten liquidity management, and build a smarter funding model, our consultants can support you end-to-end. We don’t just advise – we execute. And the value we unlock usually outweighs the cost many times over.
