APAC companies face slower cash collection

Japanese firms had the lowest days receivable at 42 days.

The average days receivable for Asia Pacific companies for year ending 2023 was 71 days, indicating a decrease in working capital availability and slower cash collection from customers, Aon's Working Capital and Performance Benchmarking Report for Asia Pacific report revealed.

Despite this, variations were noted across the region, led by Japan that reduced its days receivable by five days to 42. In contrast, Hong Kong (65 days), and Thailand (64 days) saw increases but still within regional average.

Meanhile, India fell further back to 100 days, highlighting the need for better working capital management.

Steve Taylor, head of credit solutions in Asia at Aon, emphasised the importance of optimising working capital amidst uncertainty, noting that longer conversion times can impact liquidity and profitability. He recommended strategies such as credit insurance to protect against non-payment and enhance financial flexibility.

The report also stressed the value of benchmarking. Whilst Japanese firms lead the region, they trail behind competitors in the electrical products sector, where they are 27 days slower than their Korean competitors.

“Benchmarking an organisation's days receivable against peers is an important step in assessing financial health and evaluating working capital performance. By reviewing credit solutions strategies to shorten the cash conversion cycle and unlock trapped capital, organisations can drive greater value creation and enable business growth,” said Ankit Tambe, regional director of credit solutions in Asia at Aon.