supply chain finance

Import businesses have felt the impact as rerouted cargo vessels clog unprepared African ports, tying up inventory.

Asset-light corporations are becoming asset-heavier organizations as the on-again, off-again closure of the Strait of Hormuz continues to disrupt global supply chains.

During the 30 days preceding Aug. 17, an average of 16.9 ships passed through the Strait transporting 2.2 million barrels of crude and 380,000 barrels of petrochemicals, as reported by The Strait of Hormuz Ship Monitor. By comparison, during the first quarter of 2025, the U.S. Energy Information Administration estimated that 14.2 million barrels and 5.9 million barrels of petroleum products were shipped daily through the waterway — a decrease of approximately 84% and 94%, respectively.

According to the Atlas Institute for International Affairs, the Cape route is becoming the default option for vessels. As a result, import businesses have felt the impact as rerouted cargo vessels clog unprepared African ports, tying up inventory even longer.

Bolstering inventories and increasing liquidity buffers may initially have been a short-term response to the disruption, but industry insiders view the change as permanent.

“Just-in-time has become just-in-case, and that converted inventory is now on the CFO’s balance sheet,” John Stevens, senior vice president and global head of financial institutions and working capital at Kybira, told Global Finance. ”Higher [days inventory outstanding] stretches the cash conversion cycle and that cash has to come from somewhere: You borrow it or extend supplier terms.”

Adding Days

According to the authors of Allianz Trade’s Days Sales Outstanding (DSO) & Cash Collection Cycle (CCC) report, published in July, the disruption is expected to add a global average of two days to the CCC in the second half as its effects permeate supply chains.

The authors also expected that the U.S.-Iran conflict would result in a lighter version of the 2022 supply chain shock, little appearing in listed firms’ first-half financials and more tangible in the second half as the disruption permeates supply chains with a lag.

“Electronics, pharmaceuticals, textiles, automotive suppliers, metals and paper face the most direct pressure: already inventory-heavy and running elevated cycles, they have the least room to absorb a further DIO rise without tipping their financing needs into distress territory,” they wrote. “Construction and machinery & equipment carry the largest absolute cycles (approximately 103 days) and are unlikely to escape a broad inventory rebuild. Second, the shock should be partly offset by continued private-sector spending on AI infrastructure and data centers, which supports computers & telecoms and software & IT, keeping a meaningful share of the economy on a compressing or at worst flat trajectory.”

Inventory’s Cost

“Every day of DIO you add is cash pulled out of circulation, and that comes at a premium at current financing costs,” said Stevens. “CFOs should be pricing the free cash flow hits before any DIO build-up.”

Companies should count days and dollars rather than units, he added. “Any universal number, in either units or DIO, is a guess. Transit patterns through the Strait of Hormuz have been highly volatile, with flows falling sharply and recovery remaining uneven.”

There is light at the end of the tunnel — if a company’s balance sheet is large enough.

“Large, investment-grade buyers may be better placed to fund inventory builds, while their mid-market suppliers may not be,” said Stevens. “If payment terms are stretched to fund DIO extensions, the biggest squeeze can land one or two tiers down the value chain. Supply-chain finance can help address that gap when it is structured transparently and appropriately.”

Rob Daly covers fintech and the economy. Contact him at rdaly@gfmag.com. 

With $1.7 trillion tied up in inefficient supply chains, CFOs are making liquidity a core strategy.

There’s $1.7 trillion of working capital sitting on the balance sheets of the largest U.S. companies: not locked in failed investments or delayed acquisitions, but trapped in slow receivables, excess inventory, and payment structures designed for a different economic environment. 

That money hasn’t disappeared. It remains tied up in processes that no longer reflect how companies manage risk, liquidity, or supply chains. 

For many CFOs, the largest untapped source of liquidity is the cash already embedded in operations. Yet organizations often struggle to unlock it because treasury, procurement, operations, and suppliers continue to pursue different objectives using disconnected systems and metrics. 

J.P. Morgan estimates that hundreds of billions of dollars remain trapped in working capital across large corporations, while consultant The Hackett Group places the opportunity loss at some $1.7 trillion. 

The culprits include receivables that take too long to convert to cash, inventory accumulated as protection against uncertainty, supplier payment structures that fail to balance liquidity across the value chain, and cash reserves that remain underutilized because companies lack the visibility to deploy them effectively. 

For years, these inefficiencies were manageable. Low interest rates, predictable supply chains, and abundant liquidity reduced the urgency to rethink working capital. Treasury managed liquidity, procurement negotiated payment terms, sales focused on collections, and financial institutions provided financing within established relationships. 

Today’s environment demands a different approach. 

Higher interest rates, geopolitical uncertainty, higher tariffs, supply chain disruptions, and persistent margin pressure have elevated working capital from a finance function to a strategic business priority. Yet many organizations continue to manage liquidity using operating models designed for a different era. 

According to Deloitte’s Q1 2026 CFO Signals survey, siloed organizations and outdated technology remain among the largest internal barriers to cost management. Boston Consulting Group has noted that extending payment terms alone often merely shifts financing costs along the supply chain rather than improving overall efficiency. 

The challenge is therefore broader than financing. It is about coordination. 

Working capital decisions increasingly require treasury, procurement, operations, finance, and suppliers to operate from the same information and align around shared objectives. Without that alignment, companies often optimize individual functions while reducing efficiency across the broader organization. 

Reflecting these realities, investors have changed their expectations. Following several years of tighter capital markets, boards increasingly emphasize cash-flow resilience, capital discipline, and operational efficiency alongside growth. Liquidity has become a competitive advantage rather than simply a financial metric.

Rethinking Working Capital

Companies are responding in different ways. Many are investing in better forecasting and real-time cash visibility. Others are modernizing treasury infrastructure, digitizing receivables and payables, expanding supply chain finance programs, or adopting data-driven tools that improve coordination across functions. Financial institutions are evolving their offerings through broader funding networks, automation, and digital onboarding capabilities.

No single approach will solve the challenge for every organization. What appears increasingly clear, however, is that fragmented processes and limited transparency are becoming more expensive. As supply chains grow more complex and financing conditions remain uncertain, organizations require greater visibility into where liquidity resides, how quickly it can move, and how financing decisions affect every participant across the value chain.

The International Finance Corporation and the World Bank have consistently highlighted digital infrastructure as a key enabler for expanding access to supply chain finance, particularly among smaller suppliers that have historically remained outside traditional financing programs. The objective is not technology for its own sake, but the creation of more efficient, scalable financial ecosystems.

The U.S. has one of the world’s deepest capital markets. Yet many companies continue to face unnecessary constraints in moving liquidity through their supply chains.

The next phase of working capital management, then, will likely depend less on access to capital — which remains abundant — and more on the ability to connect information, participants, and decision-making across increasingly complex commercial networks.

Organizations that succeed will be those that treat working capital not as a quarterly reporting metric but as an enterprise-wide capability that strengthens resilience, improves capital allocation, and creates flexibility in periods of uncertainty.

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Gustavo Muller is CEO and co-founder of Monkey, a financial solutions marketplace. He has more than two decades of experience in financial markets, having held senior positions at Citibank, XP Investimentos, and as co-founder of Fisher Venture Builder.