Press release – Working Capital Analysis

How to unlock more liquidity from working capital

Press release – Working Capital Analysis

Zanders study reveals that since September 2008 liquidity locked in working capital is at record level not seen this decade.

Zanders reports that companies can leverage SWIFT to unlock more liquidity from working capital than was locked since September 2008.

Zanders analyzed financial statements of 3,774 companies worldwide on working capital efficiency. The cash conversion cycle has slowed down to 48.4 days of sales, a level not seen in the last decade. This is 3 days slower than before the credit crisis, a slow pace not seen this decade. This implies that all 3.770 companies combined locked an additional EUR 183.5 Billion liquidity in their working capital since September 2008.

On average companies offloaded 30% of their additional working capital funding requirements onto their suppliers. There are notable differences in findings across geographies, industries and credit rating of companies. Unlike other regions, Asian companies take a higher share in working capital, whereas Australian companies are on average consistently improving their working capital performance.

Despite slower pace of cash conversion cycle, the majority of companies have released cash from working capital in the past 2 years (positive cashflow from operations). For US based companies this does not explain the increase in liquidity on their balance sheet. Swift commissioned Zanders to evaluate its potential contribution to corporate working capital management.

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