Bridging the gap

2015 Annual Global Working Capital Survey

After years of working capital deterioration, companies have realised that optimising working capital is crucial, and failure to manage it properly can have a serious impact on their ability to fund their day-to-day operations.

In 2014, we witnessed the first significant decrease in global working capital in 4 years, with a 2.9% year-on-year improvement. This improvement has directly contributed to an 11.3% jump in the level of cash held by companies, making them more awash with cash than they have been for the last five years.

However, this is no time to rest on one’s laurels. To sustain the recent revenue growth rates, companies will need EUR 237 billion of cash to finance next year’s growth alone. At the same time, net debt levels have experienced continuous growth while the ability to generate new cash through operations (cash conversion efficiency) has stagnated. Working capital is an obvious way to bridge the gap.

Our survey shows that a company’s working capital performance is driven by four main factors: 

  • the industry sector it operates in.  
  • the economic maturity of the region. 
  • company size is important. 
  • the importance that management places on cash and working capital.
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