Dutch companies could release EUR 72.5bn of cash from working capital. Despite recent moves by global central banks to reduce interest rates, borrowing costs remain high and access to financing is limited. Companies across industries are seeking ways to secure sufficient funds for daily operations, growth, transformation and debt repayment. As a result, working capital management has been receiving renewed board attention, as it represents opportunity to release cash for these purposes internally whilst improving a company’s operational efficiency and without financing costs.
Between 2018 and 2022, cash conversion cycle (“CCC”) days for Dutch companies overall improved by 8 days, though 48% of companies sampled saw a CCC deterioration, overall inventory days deteriorated by 6 days and significant dispersion was observed across sectors. For instance, real estate, consumer & retail and industrials companies saw improvements in working capital management, whilst technology, media and telecommunications, automobile and healthcare players experienced liquidity pressure from working capital build-up.
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