Allianz Trade: Inventory build-up increases companies' working capital needs

London – Companies' need to finance growing inventories has significantly extended the global cash conversion cycle (CCC), according to an analysis by Allianz Trade published in July 2026. The global CCC, which measures the time it takes for a unit of cash spent on operations to be collected from sales, saw a moderate increase of half a day to over 67 days. This is approximately three days above the 10-year average and close to the 2023 high.

The research reveals that Days Inventory Outstanding (DIO) explains over 80% of the change in the CCC since 2014. Companies are shifting from "just-in-time" efficiency towards a "just-in-case" model. Building larger inventories serves as a strategic hedge against geopolitical uncertainty, supply chain disruptions, and trade fragmentation. This shift means supply chains are increasingly being optimized for security and resilience, rather than solely for cost.

Asia stands out with the longest cash conversion cycle at 70 days. This is driven by long Days Sales Outstanding (DSO) of 59 days, which are not fully offset by short Days Payable Outstanding (DPO) of 44 days. Western Europe, North America, and South America follow with a CCC of 63 days. The study also highlights a significant dispersion across sectors, with 25% of firms operating below 43 days and 25% above 107 days, suggesting a growing bifurcation between strategic sectors and the rest of the economy.

For 2026, Allianz Trade forecasts a contained rise in the CCC. While new geopolitical tensions and the need to enhance supply chain resilience are increasing inventory requirements, particularly for firms in electronics, pharmaceuticals, textiles, automotive suppliers, metals, and paper, certain sectors are expected to offset some of the increase. Investments in data centers and AI infrastructure, for example, are anticipated to support companies in the computer and telecommunications sector.