UK Businesses Face Extended Cash Conversion Cycle Amid Sector Disparities

The United Kingdom's cash conversion cycle (CCC) extended by approximately one day to 39.6 days in 2025, according to a new report by Allianz Trade. While this remains faster than many European peers, the gap between sectors is widening. Businesses faced an average wait of 58 days for customer payments, with some industries experiencing substantially longer delays.

Nationally, the UK's CCC stood at 39.6 days in 2025, placing it in the lower European band, significantly below Germany's 78.7 days and France's 70.4 days. The cycle is forecast to remain broadly stable at around 41 days in 2026. Days sales outstanding (DSO) increased slightly by 0.3 days to 58 days, while days payable outstanding (DPO) fell by 1.4 days to 62 days. Days inventory outstanding (DIO) declined by 0.7 days to 44 days.

The report highlights significant payment pressures in specific sectors. Companies in transport equipment reported the longest DSO at 205 days. The pharmaceutical sector followed with 83 days, while software and IT services and computers and telecoms recorded DSOs of 74 and 72 days, respectively. In contrast, the retail sector saw much faster collections, with a DSO of 22 days.

Upcoming legislative changes could influence the situation. A proposed Commercial Payments Bill aims to introduce a maximum payment term of 60 days and mandatory interest on late payments. Businesses, particularly larger ones, will need to closely monitor payment and credit risks and supply chain dependencies, especially as inventory pressures mount across European markets.