# 3. Cash Flow Gaps: Money Trapped in the Pipeline

While your products move through the supply chain, your money sits frozen.

**Working capital inefficiency** represents one of the most significant hidden costs in supply chains:

* Globally, **$5.5 trillion of cash is tied up in working capital** ([Source: PwC, 2021](https://www.consultancy.uk/news/29784/pwc-55-trillion-of-cash-is-tied-up-in-working-capital))
* US companies alone have **$1.9 trillion tied up in excess working capital**, including $666 billion in excess inventory, $665 billion in payables, and $531 billion in receivables ([Source: The Hackett Group via Material Handling and Logistics](https://www.mhlnews.com/global-supply-chain/article/21268545/large-companies-hitting-a-ceiling-on-delaying-supplier-payments))
* **Days Sales Outstanding (DSO) reached 54.1 days**—nearly eight weeks—representing a five-year high ([Source: PwC, 2021](https://www.consultancy.uk/news/29784/pwc-55-trillion-of-cash-is-tied-up-in-working-capital))

### The Disconnect Problem

The problem stems from **disconnected payment processes** and **lack of trust**.

Suppliers demand payment terms that protect against non-payment risk. Buyers extend payment terms to preserve cash.

The gap between delivery and payment stretches to **45, 60, or 90 days**. Not because the transaction has issues. But because **verification takes time**, approval workflows are slow, and no one trusts the available information enough to accelerate payment.

<figure><img src="/files/tibefWUG6A9x8I71Ossl" alt=""><figcaption></figcaption></figure>

#### The Cost of Delays

Treasury departments report that **each additional day of DSO costs between 1-2% in annual carrying costs**, including opportunity costs and administrative expenses ([Source: Resolve Pay, 2025](https://resolvepay.com/blog/9-statistics-that-quantify-the-treasury-cost-of-tied-up-working-capital)).

Additionally, **51% of global suppliers are paid after the invoice due date**, with this figure rising from 36% in 2021 ([Source: Taulia, 2024](https://www.gtreview.com/news/global/late-payment-issues-worsening-in-global-supply-chains-taulia-data-reveals/)).

### Who Bears the Burden

Small and medium suppliers bear the brunt of these inefficiencies.

While large enterprises can leverage their size to negotiate favorable terms, smaller suppliers often face **invoice factoring costs of 2-5%** just to access cash while waiting for payment.

This adds yet another hidden cost. One your organization may not directly pay. But that ultimately **increases supplier pricing** or **limits supplier diversity**.

### Strategic Implications

The impact extends beyond accounting.

Cash flow constraints limit your ability to:

* Take advantage of **volume discounts**
* Negotiate **better terms**
* Fund **innovation**
* Respond quickly to **market opportunities**

Money sitting idle in the payment pipeline is money that could be **deployed for growth**.


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