Gen AI Can Help Unlock $1.7 Trillion in Excess Working Capital

MIAMI--(BUSINESS WIRE)--Aug. 18, 2025-- The Hackett Group, Inc. (NASDAQ: HCKT), a leading generative artificial intelligence (Gen AI) consultancy and executive advisory firm, today released findings from its 2025 U.S. Working Capital Survey, revealing a 4% improvement in the cash conversion cycle (CCC) – now at 37 days – after a turbulent year of across-the-board deterioration. The rebound was fueled primarily by a 3% improvement in days payable outstanding (DPO), highlighting renewed opportunities to unlock liquidity amid ongoing uncertainty.

The research, based on an analysis of the top 1,000 U.S. publicly traded nonfinancial companies, found that $1.7 trillion remains trapped in excess working capital – this represents 35% of gross working capital and 11% of aggregate revenue. While DPO rebounded to 59 days, both days sales outstanding (DSO) and days inventory outstanding (DIO) worsened slightly, reflecting macroeconomic volatility, cautious inventory strategies, and shifting customer dynamics.

“Amid high interest rates and growing tariff risks, the working capital opportunity is more strategic than ever,” said István Bodó, senior director, Transformation Finance at The Hackett Group^®. “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.”

Despite the overall CCC improvement, the gap between top-quartile and median performers widened – particularly in DPO, where a 9% performance delta indicates that many companies continue to struggle with payables optimization. DSO saw its second straight year of degradation, as customer bargaining power drove extended payment terms. Accounts receivable now accounts for the largest share of excess working capital – an opportunity valued at $600 billion – driven by an 18-day DSO gap between top and median performers.

Several industries demonstrated notable gains:

• Semiconductors and equipment improved CCC by 6%, supported by an 18% increase in DPO.
• Textiles, apparel and footwear saw a 10% CCC improvement, led by a 22% increase in DPO.
• Utilities achieved a 34% CCC improvement, driven by a 13% increase in DPO.

Conversely, the computer hardware and peripherals sector experienced a 182% decline in CCC due to overproduction and inventory buildup driven by AI-fueled demand and trade policy uncertainty.

The report also highlights how Gen AI can enhance working capital performance across key areas – from autonomous inventory management to predictive collections and supplier risk mitigation. Other practical Gen AI use cases outlined in the report can help companies streamline processes, improve forecasting and accelerate cash flow.

“Finance leaders ranked working capital optimization as their top priority for the year in our 2025 Finance Key Issues Study – a significant shift from years past,” said Vince Griffin, principal, Finance Advisory practice leader at The Hackett Group^®. “But sustained improvement requires a combination of process and operating model changes, skill development, and technology modernization to improve insight into working capital drivers and unlock the excess working capital opportunity. Gen AI is emerging as a valuable tool for strengthening discipline around working capital – provided it is deployed properly and viewed as part of a broader strategy rather than a quick fix.”

Additional insights from the report:

• Aggregate revenue rose 4% in 2024, driven by innovation-led sectors like semiconductors (+28%) and internet software and services (+14%).
• Earnings before interest, taxes, depreciation and amortization margin climbed to 19% (+6%), as a result of 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.
• Capital expenditures increased 5%, as companies invested in AI infrastructure and supply chain resilience.

Download the full results and insights from the 2025 U.S. Working Capital Survey for free with registration.

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 97% of the Dow Jones Industrials, 90% of the Fortune 100, 70% of the DAX 40 and 51% of the FTSE 100. Visit us at www.thehackettgroup.com.

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Source: The Hackett Group, Inc.