Companies are increasingly prioritising business continuity over the relentless optimisation — meaning reduction — of inventories of materials and production components. An Allianz Trade report shows that businesses around the world are committing a growing share of their cash to ongoing operations, increasing the amount of capital tied up in inventories.
Over time, this trend may result in some working-capital financing costs being transferred to other parts of the supply chain. The largest buyers may improve their own liquidity at the expense of suppliers by demanding longer payment terms and greater flexibility in trade credit.
- The global cash conversion cycle, or CCC — defined and explained in the methodology section below — increased again in 2025 and remains at a high level. The CCC measures the time between a company spending cash on materials or goods and recovering that cash through customer payments. It is currently approximately three days above the 10-year average and around four days longer than before 2020, when it stood at 63 days. This is not a sudden increase, but a structurally higher level that shows no sign of declining.
- The shortest cash conversion cycles are recorded in Eastern Europe, at approximately 55 days, and the Middle East and Africa, at around 57 days. Companies in these regions recover cash committed to operations most quickly. At the other end of the scale is Asia, where the cycle lasts 70 days and businesses must finance working capital for the longest period. Western Europe, North America and South America are in the middle, with an average CCC of 63 days.
- Inventories have become the main factor shaping the cash conversion cycle. They now account for almost 80% of its total level and more than 80% of the changes recorded since 2014. Companies are moving away from the “just-in-time” model towards a “just-in-case” approach, treating larger inventories as strategic protection against geopolitical risks, supply disruptions and trade fragmentation.
- Differences between sectors around the world are enormous. One-quarter of companies have a CCC below 43 days, while another quarter exceed 107 days. This suggests that a division is emerging between strategic industries and the rest of the economy.
- Cash conversion cycles lengthened in 12 of the 20 sectors analysed. Automotive suppliers recorded the largest increase, at four days, followed by the paper, metals and textiles industries, each with increases of approximately three days. The cycle shortened in eight sectors, particularly transport equipment, where it fell by six days, computers and telecommunications, where it declined by four days, and energy, where it decreased by three days.
- The uneven impact of “securonomics” is increasingly visible. Industries most exposed to supply-chain fragmentation — particularly upstream manufacturers and producers of industrial raw materials and intermediate goods — have increased their inventory buffers. This has resulted in structurally higher working-capital requirements.
What Changed After 2020 — and Why Are Companies Deliberately Tying Up More Cash?
For many years, businesses sought to reduce inventories as much as possible and shorten their cash conversion cycles, primarily to minimise costs. Success meant smaller warehouses, a shorter cash cycle and lower working-capital requirements.
Today, that model is changing.
The global cash conversion cycle increased to more than 67 days in 2025, approximately four days longer than the average recorded before 2020. This is no longer a temporary consequence of the pandemic, war, trade conflicts or subsequent geopolitical crises. It is a new reality that has persisted for several years.
Only a few years ago, companies optimised their supply chains primarily for cost. Today, they are increasingly optimising them for resilience.
Rising geopolitical tensions, transport disruptions, energy-related problems and increasingly frequent extreme weather events mean that companies are prepared to accept higher working-capital financing costs in exchange for greater supply security.
Allianz Trade’s Economic Research Department describes this transition as a shift from “just in time” to “just in case”.
What Is Currently Driving the Lengthening of Companies’ Cash Cycles?
Contrary to common assumptions, receivables are not the main factor.
Allianz Trade’s analysis shows that inventories currently have the greatest influence on the length of companies’ cash conversion cycles, accounting for almost 80% of their total level.
Since 2021, inventories have also become the main driver of changes in the CCC, accounting for approximately 90% of the total movement.
This means that capital is now most often being tied up because companies are deliberately building inventory levels — or, more accurately, inventory buffers — rather than merely because customers are paying late.
This is one of the most significant changes in working-capital management for many years.
Before the pandemic, average inventory levels accounted for approximately 68% of changes in the CCC. Today, their role is substantially greater.
In practical terms, companies around the world increasingly view inventory not merely as a cost, but as a form of business protection.
How Much Does Security Cost?
Additional inventory means that more cash is tied up.
Every extra day of inventory must be financed and increases a company’s working-capital requirements. According to Allianz Trade estimates, every additional day of inventory outstanding, or DIO, translates on average into a 1.16-day extension of the cash conversion cycle.
This represents a fundamental change in the way companies manage their finances.
For years, businesses concentrated on releasing cash tied up in working capital and reducing inventory levels. Today, some companies are consciously accepting higher financing requirements, treating them as the cost of building resilience against disruptions in trade and supply chains.
In other words, businesses are increasingly paying for operational security by maintaining larger inventories and tying up more cash in them.
In a world of increasingly frequent disruptions, the cost of running out of components or suspending operations may exceed the cost of storing additional goods.
Allianz Trade’s analysis shows that businesses are increasingly choosing higher operating costs in exchange for greater predictability.
Allianz Trade’s climate reports support this conclusion.
In the case of floods, the largest economic losses do not result from physical damage alone, but from interruptions to business activity and disruptions to transport and supply chains.
The same applies to extreme heat. In the most exposed countries, the cumulative decline in investment caused by high temperatures may reach 12–15%, significantly exceeding the corresponding decline in consumption.
From the perspective of corporate finance managers, this means that inventory is no longer exclusively a cost.
It is increasingly becoming a form of insurance against operational risk.
The question is therefore no longer simply, “How much can we reduce inventory?” Instead, companies increasingly ask, “How much cash is it worth tying up to avoid the much larger costs of business interruption?”
This shift in thinking is one of the most important changes in working-capital management in recent years.
Which Industries Tie Up the Most Cash?
An increasing number of companies consider this additional cost acceptable.
In many sectors, the risk of production stoppages has proved to be a greater threat than the cost of maintaining additional inventory.
This is particularly visible in industrial sectors.
The average global cash conversion cycle currently stands at approximately:
- 123 days for manufacturers of transport equipment;
- 108 days for electronics companies;
- 103 days for construction companies;
- 103 days for machinery and equipment manufacturers;
- 100 days for pharmaceutical companies.
These industries have been among those most severely affected by supply disruptions in recent years. They have also expanded their safety inventories most significantly.
By comparison, the current global average CCC is approximately 67 days.
The differences between sectors are therefore substantial.
Allianz Trade reports that 25% of companies worldwide have cash committed to operating activity for more than 107 days. This creates significantly greater working-capital financing requirements than in industries with shorter cash cycles.
By comparison, energy companies around the world recover the cash invested in their operations after an average of approximately 18 days.
For transport companies, the figure is around 19 days, while service companies average 23 days and retailers approximately 29 days.
In practice, this means substantially lower working-capital financing requirements and greater resilience to changes in the cost of borrowing.
Which Sectors Are Building Inventories, and Which Are Releasing Cash?
The length of the cash conversion cycle does not tell the whole story. The direction of change is equally important.
In 2025, automotive-component manufacturers recorded the largest increase in the CCC, at four days.
The paper, metals and textiles sectors followed, with increases of approximately three days each.
Allianz Trade analysts describe these industries as “creeping risks”, because they already operate with relatively high working-capital levels while continuing to increase their inventories.
In the event of further supply disruptions, they may require additional financing much sooner than other sectors.
At the opposite end of the scale are transport equipment manufacturers, whose CCC declined by six days, the computers and telecommunications sector, where it fell by four days, and the energy industry, where it decreased by three days.
Despite geopolitical tensions and economic uncertainty, these industries successfully released cash from working capital.
According to Allianz Trade, this may reflect stronger negotiating power, higher profitability, strong cash generation and sustained demand for their products and services.
What Does the Comparison with the Pre-Pandemic Period Show?
One of the most interesting sector-specific conclusions is that the increase in the CCC has not been uniform.
Some industries now operate in much the same way as before the pandemic, while others have undergone a lasting change in their business models.
Compared with the 2013–2019 period, the largest increases were recorded in:
- automotive components: 25 days;
- textiles: 15 days;
- electronics: 13 days;
- metals: 12 days.
These sectors are particularly exposed to disruptions in global supply chains and have therefore expanded their safety buffers most significantly.
At the same time, some sectors have become more efficient than they were before the pandemic.
This applies particularly to:
- energy: nine days below the 2013–2019 level;
- vehicle manufacturing: six days below;
- computer and telecommunications equipment: three days below.
This shows that greater operational resilience does not always have to be associated with higher working-capital requirements.
In some industries, strategic importance and a strong market position allow businesses to build resilience without significantly reducing financial efficiency.
In Poland, Statistics Poland data show that inventories are increasing in the same industries that are among the most capital-intensive globally, including automotive manufacturing, machinery and industry.
However, this growth has been accompanied by increases in production, exports and investment, as well as improved corporate financial results.
This suggests that the current situation is more representative of expanding economic activity and the restructuring of supply chains than deteriorating corporate liquidity.
Nevertheless, exposure to export markets creates a risk that foreign customers will pressure Polish suppliers to participate in financing their lengthening cash conversion cycles.
How Do Poland and Central and Eastern Europe Compare Globally?
Poland remains an economy strongly dependent on industry, component manufacturing and exports to Western Europe.
Many domestic companies operate in sectors identified in the Allianz Trade report as particularly likely to accumulate inventories. These include automotive manufacturing, machinery and component production, metal products, electronics and the wider manufacturing sector.
Contrary to common perceptions, Eastern Europe is among the regions with relatively short corporate cash conversion cycles.
According to Allianz Trade, the average CCC in the region stands at approximately 54 days, compared with 63 days in Western Europe and more than 70 days in Asia.
This is primarily due to the relatively small gap between trade receivables and trade payables, as well as lower inventory levels than in many other parts of the world.
The region also has a relatively “lean” working-capital structure, meaning that companies commit less cash to ongoing operations than their competitors in Western Europe or Asia.
This should not be interpreted solely as evidence of greater efficiency.
In some cases, it may also reflect more limited access to financing, smaller liquidity buffers and a lower willingness or ability to maintain large safety inventories.
Supplementary Analysis
The global cash conversion cycle increased again in 2025 and remains at a high level.
The global CCC — the time required to convert cash spent on operations into cash collected from sales — increased moderately by half a day, exceeding 67 days.
This is more than three days above the 10-year average and close to the 2023 peak of 68 days.
The average recorded during the past four years is now approximately four days longer than the pre-2020 level of 63 days.
This is therefore not a temporary increase, but a structurally higher level that shows no signs of improvement.
Asia has the longest cash conversion cycle.
The CCC increased in:
- Western Europe by 1.8 days;
- the Middle East and Africa by 1.6 days;
- Asia by 1.2 days;
- South America by one day.
It declined in:
- North America by 2.2 days;
- Eastern Europe by 1.7 days.
Asia records the longest cycle, at 70 days, mainly because of a persistent trade gap.
Customer payment periods, measured by days sales outstanding, or DSO, stand at 59 days. These are not fully offset by relatively short supplier payment periods, measured by days payable outstanding, or DPO, of 44 days.
Asia is followed by Western Europe, North America and South America, all of which record similar CCC levels of approximately 63 days.
Eastern Europe and the Middle East and Africa have the shortest cycles.
Inventories are the main driver of change in a world increasingly shaped by geoeconomics — or, more accurately, geopolitics.
The days inventory outstanding indicator currently accounts for almost 80% of the total CCC and more than 80% of its changes between 2014 and 2025.
Before 2021, inventories accounted for 68% of CCC volatility. Since 2021, that share has risen to 90%.
This reflects a fundamental change in corporate behaviour.
Businesses are moving away from “just-in-time” efficiency towards “just-in-case” resilience. Higher inventory levels are becoming a strategic safeguard against geopolitical uncertainty, supply-chain disruptions and the fragmentation of international trade.
In other words, supply chains are no longer being optimised solely for cost. They are increasingly designed around security, resilience and flexibility.
Differences between sectors are considerable.
One-quarter of companies maintain a CCC below 43 days, while another quarter exceed 107 days.
This suggests a growing divide between strategic industries and the rest of the economy.
Of the 20 sectors analysed, 12 recorded longer cash conversion cycles. The largest increases were seen among automotive suppliers, at four days, and in the paper, metals and textiles industries, at three days each.
The CCC shortened in eight sectors, particularly transport equipment, where it declined by six days, computers and telecommunications, where it fell by four days, and energy, where it decreased by three days.
Sectoral differences in working capital reflect the uneven impact of “securonomics”, or security-oriented economics.
Industries most exposed to supply-chain fragmentation — particularly manufacturing and producers of intermediate goods — have expanded their inventory buffers.
This has resulted in permanently higher working-capital requirements.
By contrast, several strategically important sectors, including energy, transport equipment and digital infrastructure, have shortened their cash conversion cycles despite greater geopolitical uncertainty.
This is probably due to a combination of stronger pricing power, high cash-generating capacity, supportive industrial policies and sustained structural demand.
Strategic importance does not therefore necessarily mean greater inventory intensity.
It increasingly translates into stronger financial and operational flexibility, allowing companies to improve resilience while maintaining efficient working-capital management.
The Cash Conversion Cycle Is Expected to Lengthen Moderately in 2026
Allianz Trade expects a further moderate increase in the CCC in 2026.
First, its analysts expect the US–Iran conflict to resemble a milder version of the 2022 supply shock.
The impact on the financial results of listed companies is expected to remain limited during the first half of 2026 because the normalisation of trade flows takes time.
More noticeable consequences are expected in the second half of the year, when disruptions begin to work their way through supply chains with a delay.
Allianz Trade therefore does not expect a repeat of the sharp increase recorded in 2022, when the CCC rose by five days, 81% of which was attributable to inventory growth.
However, the consequences of this shock will not be distributed evenly across sectors.
The strongest pressure is expected in:
- electronics;
- pharmaceuticals;
- textiles;
- automotive suppliers;
- metals;
- paper.
These industries already have high inventory levels and extended cash conversion cycles. They therefore have limited capacity to absorb any further increase in DIO without significantly increasing their working-capital requirements.
Construction and the machinery and equipment sector also have the highest absolute CCC levels, at approximately 103 days, and are unlikely to avoid broad inventory rebuilding.
Second, the negative impact of the shock should be partly offset by continued private-sector investment in artificial intelligence infrastructure and data centres.
This supports the computers, telecommunications, software and IT sectors, allowing a significant part of the economy to continue shortening, or at least stabilising, its cash conversion cycle.
Under this scenario, measures intended to strengthen energy security, build strategic reserves and improve supply-chain resilience, together with the direct consequences of the conflict, are expected to increase the global DIO by approximately two additional days.
According to Allianz Trade estimates, every additional day of DIO globally translates into an increase of approximately 1.16 days in the CCC.
Definitions
DSO — Days Sales Outstanding
DSO measures the time required to collect receivables from customers. It is the average number of days between a sale and receipt of payment.
DPO — Days Payable Outstanding
DPO measures how long a company takes to settle its liabilities to suppliers.
DIO — Days Inventory Outstanding
DIO measures the length of time for which cash remains tied up in inventory.
CCC — Cash Conversion Cycle
The cash conversion cycle is a time-based indicator expressed in days. It shows how long it takes for a unit of cash spent on operations to be converted into cash collected from sales.
It is calculated using the following formula:
CCC = DSO − DPO + DIO
WCR — Working Capital Requirement
The working-capital requirement is the monetary equivalent of the CCC, expressed in currency units.
It shows the amount of money currently tied up in a company’s operating cycle.
Methodology
Allianz Trade’s calculations are based on financial data for listed companies available in the LSEG database.
The dataset covers 55 countries and approximately 25,000 companies.
The analysis focuses on businesses that publish extended financial statements containing both income-statement and balance-sheet information.
Annual levels and changes are calculated from consecutive quarterly data using a four-quarter moving average rather than year-on-year changes.
This approach reduces the effect of accounting distortions such as window dressing at the end of reporting periods or large one-off deliveries completed shortly before the end of a quarter or year.
Two significant methodological changes were introduced compared with previous editions of the study:
- the median was used instead of the arithmetic mean to limit the influence of extreme observations, resulting in lower values for most indicators;
- the sector classification was adapted to Allianz Trade’s internal nomenclature covering 20 sectors instead of the 22 used previously.
Global and regional indicators are calculated by aggregating all companies from all countries included in the sample, rather than averaging regional or national values.
This approach is intended to provide a more accurate reflection of actual business conditions and competitive relationships.
In the 2025 sample, companies were distributed geographically as follows:
- Asia: 53%;
- North America: 19%;
- Western Europe: 15%;
- Middle East and Africa: 7%;
- South America: 4%;
- Eastern Europe: 2%.
All data presented reflect the position as of 1 June 2026.
Source: ManagerPlus.pl
