Cash back to shareholders or cash stuck to finance customers? American and European firms deal with trade war differently

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Executive Summary:
Working Capital Requirements (WCR) rose by +2 days globally in 2024, reaching 78 days – the highest level since 2008 – with no major signs of easing in early 2025. This increase reflects the cost of adaptation to high uncertainty and tighter financial conditions as trade frictions and recession risks on the horizon have affected turnover growth, payment terms and inventory strategies.
The US stands out with a decrease of WCR by -3 days. Firms have been destocking (apart from a couple of sectors) to unlock capital and redirect it to shareholders – a very risky strategy in times of trade war.
European firms continue to be the invisible banks for their customers, providing an estimated EUR11bn in trade credit and bearing growing financial risks. Amid sluggish growth and weak factory orders, European corporates increased DIO and maintained elevated receivables, while DPO shortened – resulting in significantly higher WCR.