In today’s volatile economic landscape, the pressure on corporate finance leaders to unlock cash and improve liquidity has never been greater. Traditional working capital optimization focusing on receivables, payables, and inventory remains essential, but the game is changing. Artificial Intelligence (AI) is emerging as a powerful enabler, offering new ways to drive efficiency, accuracy, and strategic decision-making. Here are five tangible ways AI can transform working capital management for corporates across sectors.
1. Predictive receivables management
AI models trained on historical payment behavior can forecast which customers are likely to pay late, enabling proactive credit control. By analyzing patterns across customer segments, industries, and geographies, AI can help prioritize collection efforts, tailor dunning strategies, and reduce Days Sales Outstanding (DSO). This predictive capability allows finance teams to shift from reactive to proactive receivables management, improving cash flow reliability.
2. Automated contract term reconciliation
Many organizations suffer from misaligned payment terms between contracts and ERP master data. AI-powered agents can automatically extract payment terms from contracts using natural language processing (NLP) and compare them with system records. This reduces manual effort, flags inconsistencies, and ensures compliance with negotiated terms, ultimately preventing early payments and missed collections.
3. Inventory optimization through AI forecasting
AI can significantly enhance inventory planning by using Machine Learning to forecast demand more accurately. These models account for seasonality, trends, and external factors such as market shifts or supply chain disruptions. Combined with clustering algorithms to identify slow-moving or obsolete stock, AI enables smarter decisions on reordering, safety stock levels, and scrapping. This can result in optimized inventory levels, reduced holding costs, and improved service levels.
4. Dynamic payment term benchmarking
AI agents can continuously scan industry data, online portals, and public filings to benchmark payment terms across sectors. This empowers commercial, procurement and finance teams to annually negotiate terms with both suppliers and customers based on real-time insights. For suppliers, AI can help identify opportunities to optimize Days Payable Outstanding (DPO) without compromising supplier relationships or incurring penalties. For customers, AI can support efforts to optimize DSO by aligning terms with industry norms and negotiating more favorable conditions. By harmonizing payment terms across the value chain, companies can unlock significant liquidity while maintaining operational resilience.
5. AI agents for cash flow forecasting and scenario simulations
Cash flow forecasting is a cornerstone of working capital management, and AI can dramatically improve its accuracy and agility. AI agents can be deployed to generate both short-term and long-term forecasts using direct methods based on transactional data and indirect methods based on projected financial statements. These agents can continuously learn from historical patterns and external variables such as seasonality, macroeconomic indicators, and customer behavior.
Beyond forecasting, AI enables powerful scenario simulations. Finance teams can model the impact of different working capital assumptions, such as an acceleration in customer collections by five days or an inventory turnover improvement by 10%, and instantly visualize the cash flow implications. These simulations help decision-makers evaluate trade-offs, stress-test strategies, and make informed choices under uncertainty. By embedding AI into forecasting and scenario planning, organizations gain a dynamic, forward-looking view of liquidity that supports both tactical and strategic decision-making.
The way forward
AI is not a silver bullet, but when applied thoughtfully, it can unlock significant value in working capital management. From predictive analytics to intelligent automation, the opportunities are real and actionable. At KPMG, we are helping clients embed AI into their finance functions, not just as a technology upgrade, but as a strategic lever for liquidity and resilience. The future of working capital is intelligent, and the time to act is now.
