Retail Finance: Virtual Cards & AI Optimize Working Capital

The contemporary retail landscape is undergoing a profound transformation, driven by an imperative for more efficient working capital management. In an era where agility and financial resilience are paramount, retailers and their suppliers are increasingly recognizing that the strategic optimization of working capital holds the key to unlocking substantial savings and fostering robust operational stability. A recent PYMNTS Intelligence study, commissioned by Visa, illuminated this trend, revealing that a significant majority of CFOs and treasurers—four out of five—surveyed for the 2025/2026 Working Capital Index have realized an average of $19 million in savings through the judicious application of external working capital solutions. This impressive figure underscores a pivotal shift towards technologically integrated financial strategies.

Rich Rein, the Chief Financial Officer at JOOR, a leading digital wholesale platform, emphasizes that these findings vividly illustrate how embedded finance is fundamentally reshaping the intricate dynamics between brands and retailers. Rein posits that the retail industry serves as a quintessential example of the critical importance of effective working capital management. He articulates, "It’s a textbook case," highlighting the sector's inherent complexities and its ripe potential for financial innovation.

The Evolving Landscape of Retail Working Capital

The transactional ecosystem between buyers and suppliers within the retail sector is characterized by its inherent complexity. A persistent challenge lies in the frequent stalling of cash flow mid-supply chain, leading to brands enduring prolonged waiting periods for payment collection, while retailers often exhibit a natural reluctance to disburse funds prior to inventory sales. This fundamental divergence in financial objectives—where brands seek accelerated payment and retailers aim to extend payment terms—creates a classic working capital dilemma. Bridging this gap has become an increasingly critical function of embedded working capital solutions, which are meticulously designed to inject flexibility into both sides of the financial ledger.

Addressing SMBs' Unique Challenges

While large-scale enterprises typically enjoy ready access to conventional bank credit lines, Rein points out a notable disparity within the "SMB [small and mid-size businesses] and middle-market part of the world," where the pace of innovation in lending tools has been comparatively slower. Although the adoption of credit and virtual cards has seen growth, other crucial lending mechanisms have been sluggish to evolve. Rein further elaborates that the traditional underwriting frameworks employed by established banks frequently "don’t really fit" the distinctive cash flow realities faced by small and mid-sized retailers. This misalignment is not attributable to a fundamental lack of creditworthiness but rather to the fact that these entities often do not conform to the conventional underwriting models historically utilized by banks. Consequently, this market void has catalyzed a "proliferation of alternative lenders trying to step in and fill that void," signaling a growing demand for more tailored financial instruments.

Embedded Finance: A Paradigm Shift for Retail Transactions

The aforementioned market gap has ignited a new wave of demand for embedded finance and sophisticated digital payment tools capable of simplifying transactions between buyers and suppliers. JOOR's strategic response to this demand manifests in JOOR Pay, a platform explicitly engineered, as Rein describes, "to make embedded payments easier." The overarching objective of JOOR Pay is to streamline transactional processes for both participating parties, acknowledging that the relationships between brands and retailers are of paramount importance and should ideally transcend adversarial dynamics.

Key Features and Impact of Digital Solutions

A cornerstone feature of JOOR Pay is its inherent capability for brands and retailers to transact in virtually any currency. This degree of flexibility is instrumental in enhancing liquidity for both entities involved and, critically, in accelerating cash conversion cycles. Rein notes that JOOR's client base, encompassing both brands and retailers, is actively embracing these digital tools to elevate the overall efficiency of their accounts receivable (AR) and accounts payable (AP) processes. On average, brands leveraging JOOR's platform report an impressive 80% reduction in operational costs when adopting a digital solution like JOOR Pay for managing their wholesale business, as opposed to relying on more traditional, manual methodologies.

Strategic Implications: Beyond Cost Savings to Partnership Building

The evolution of working capital solutions extends beyond mere cost-saving mechanisms. From Rein's perspective, these solutions are increasingly integral to the broader objective of maintaining and nurturing trust and robust partnerships between brands and retailers. He cautions that the emphasis on maximizing individual working capital efficiency can sometimes lead to overlooking the profound importance of sustaining "good, true partnerships." Retailers who consistently demonstrate prompt payment practices often gain preferential access to inventory, underscoring a powerful symbiotic relationship. Rein highlights that "Financial stability and willingness to pay…has become increasingly important when a brand is looking at who they want to be working with." Karen Webster, echoing this sentiment, observes that the healthiest supplier ecosystems are characterized by similar dynamics: "If a supplier can send inventory to multiple places, why not start with those who pay the fastest?" This reinforces the notion that liquidity and reliability have effectively transformed into significant competitive advantages in the modern retail landscape.

Leveraging AI and Data for Enhanced Financial Acumen

Both executives underscore the accelerating role of artificial intelligence (AI) and data-driven forecasting in shaping how retailers approach working capital management. Rein articulates that JOOR is actively deploying advanced analytics "to help us surface insights that otherwise just simply may not be as evident." He explains that AI capabilities profoundly enhance forecasting accuracy, optimize inventory planning, and even refine supplier production schedules. The ability to "leverage data…to better inform expectations of supply and demand…to drive efficiency in all aspects of the supply chain" is revolutionizing operational paradigms.

Adaptive Purchasing Strategies and Future Outlook

This heightened visibility is also instigating fundamental shifts in how retailers structure their purchasing cycles. Rein observes a discernible trend among brands towards "smaller upfront orders, but then more frequent reorders." This adaptive pattern now constitutes nearly 35% of JOOR’s platform's gross merchandise value, illustrating a significant strategic pivot. Such strategies, he asserts, demonstrate how companies are proactively "adapting their business strategies to optimize their working capital overall." Looking forward to 2026, Rein advises retailers to strike a delicate balance between caution and progressive advancement. While it is facile to perceive the retail landscape as predominantly defensive, the underlying reality is a strategic reorientation towards enabling working capital efficiency. Ultimately, Rein concludes that "brands will do business with retailers who are easy to do business with, and vice versa," underscoring the enduring value of frictionless, trust-based commercial relationships in a technologically empowered future.