The insurer’s latest Cash at Risk study shows that Germany’s cash conversion cycle (CCC)—a key measure of how quickly companies turn operational spending into cash received from customers—rose by 1.8 days in 2025 to 79 days. That is around 16 days higher than the Western European average, underlining the relatively heavy working capital burden faced by German companies.
The deterioration reflects a combination of slower customer payments and rising inventory levels. Days Sales Outstanding (DSO), which measures the average time needed to collect invoices, increased by 2.8 days to 55 days. At the same time, companies held larger inventories, with Days Inventory Outstanding (DIO) climbing to 58 days.
Although German firms have marginally extended payment terms with suppliers, they still settle invoices after an average of just 35 days—roughly two weeks faster than the Western European average. According to Allianz Trade, this leaves businesses with limited scope to ease cash flow pressures by delaying supplier payments.
The sectors with the longest cash conversion cycles include computer and telecommunications, electronics, paper and pharmaceuticals, where substantial amounts of capital remain tied up in stock and outstanding receivables.
The findings reflect a broader shift in corporate supply chain strategy. Rather than prioritising efficiency through “just-in-time” inventory management, companies are increasingly building strategic stockpiles to protect themselves against geopolitical tensions, supply chain disruptions and a more fragmented trading environment. While this improves resilience, it also increases financing needs as more cash remains locked in inventories.
The trend is not limited to Germany. Globally, the average cash conversion cycle rose to more than 67 days in 2025, remaining close to its highest level in over a decade. Allianz Trade estimates that inventories now account for almost 80% of the cash conversion cycle, highlighting how working capital requirements are becoming increasingly driven by stock rather than payment terms.
Looking ahead, Allianz Trade expects conditions to deteriorate further. It forecasts Germany’s cash conversion cycle will increase to 83 days in 2026 as customer payment behaviour weakens further and companies continue to maintain elevated inventory levels. Although investment in AI infrastructure and digital technologies is expected to support some sectors, businesses are likely to face higher short-term financing needs as geopolitical uncertainty continues to reshape global supply chains.
Source: allianz-trade.com
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