Introduction to the Report
The expert economists at Allianz Trade, recognized as the global leader in trade receivables insurance, have unveiled an updated report on the current status of Working Capital Requirements (WCR) and Accounts Receivable Values (AV). The report highlights a significant increase in Global WCR for 2024, marking the highest level since 2008, primarily driven by extended receivables maturities.
According to the findings, European companies have effectively acted as banks, providing an estimated €11 billion in trade credit, while their US counterparts have utilized freed-up cash to reward shareholders. Should the “Independence Day” tariffs be fully enacted, both European and American companies would require an additional three days’ worth of financing, amounting to €8.5 billion for Europe and $15.5 billion for the US.
Global Working Capital Requirements Reach New Heights
The report indicates a global increase in OHS by an average of two days, reaching 78 days in 2024, the highest since the global financial crisis. As of early 2025, there are only limited signs of a decline from these levels. Particularly in Western Europe, there has been a four-day increase for the third consecutive year. Meanwhile, the Asia-Pacific region recorded a moderate two-day increase, whereas the US experienced a decrease in OHS due to destocking.
The Implications of the Ongoing Trade War
Prepared by Allianz Trade, the report suggests that global economic growth will remain at its lowest level since 2008, outside of recessionary periods, amid record uncertainty and persistent trade tensions. By 2025, weak demand could further strain companies’ turnover. The report also notes that US companies’ lower inventories and European companies’ significant credit risk expose them to increased financing requirements.
Ana Boata, Head of Macroeconomic Research at Allianz Trade, warns of a substantial increase in OHS under adverse scenarios. “If US tariffs are implemented at the rates announced on Independence Day, GDP growth could drop by 1 percentage point, leading to an increase in OHS. In such a scenario, firms in Europe and the Americas would require an additional €8.5 billion and $15.5 billion in financing, respectively, equivalent to three days of turnover for both regions. Additionally, a 1 percentage point rise in interest rates due to fiscal instability and supply-side inflationary shocks could increase OHS by €14 billion in Europe and $26 billion in the US.
Sectoral Analysis
According to the report, seven sectors in North America, Western Europe, and the Asia-Pacific region experienced increases in OHS, primarily due to weak demand. These sectors include transportation equipment, chemicals, energy, retail, machinery equipment, metals, and software/IT services. In contrast, OHS declines were more scattered; while most sectors in the US showed improvement, only a few specific sectors in Europe, such as paper, B2C services, and hospitality, exhibited declines.
Ano Kuhanathan, Head of Corporate Research at Allianz Trade, highlights that by the fourth quarter of 2024, 35 percent of global firms’ OHS exceeded 90 days of turnover. Meanwhile, partial figures indicate a slightly larger than usual quarterly increase. “However, despite record imports, US commercial inventories have declined, suggesting selective pre-stocking rather than widespread accumulation. This inventory reduction has boosted earnings and created capital, setting the stage for share buybacks to exceed $1 trillion by 2025, with the first quarter already reaching $234 billion. US firms appear to be reallocating capital from warehouses to wallets and from factories to shareholders.”
Driving Factors for Increased Payment Terms in Europe
The report reveals that in 2024, Global Payment Terms (PDs) rose by more than two days, surpassing the overall increase in OHS, and were the main factor exerting upward pressure on OHS.
Maxime Lemerle, Principal Analyst, Insolvency Research at Allianz Trade, notes that European companies are financing their trading partners by extending payment terms and absorbing risk. “Between the fourth quarter of 2024 and the first quarter of 2025, firms raised an additional €11 billion. This is nearly equivalent to the monthly new lending by banks since the start of the year.”
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