The average days receivable for Asia Pacific companies in 2023 was 71 days. Although a small increase from 2022, an increase in days receivable reflects a decrease in working capital availability and indicates slower collection of cash from customers, says Aon, a leading global professional services company.
In its “2024 Working Capital and Performance Benchmarking Report” for Asia Pacific, Aon examines the working capital performance and practices of more than 900 companies across 21 industries and 12 countries/territories in the region.
The report also reveals significant variations in days receivable across industries and countries/territories, highlighting the need for regional and sector-specific solutions. In 2023, companies in Japan reduced their days receivable by five days to 42 days and now lead the region in days receivable performance. Conversely, companies' days receivable increased considerably in Hong Kong at 65 days (+3.6), Thailand at 64 days (+2.6), and India (+2.7). While Hong Kong and Thailand remain below the regional average of 71 days, India fell further back to 100 days, emphasising an opportunity for Indian corporates to optimize their working capital management.
Benchmarking against industry competitors is crucial for identifying areas for improvement in the working capital cycle. Japanese corporates, for example, are the regional leader in days receivable across all sectors, however within the electrical products sector, they fall behind the industry average and are 27 days slower than their Korean competitors in the same sector.
Mr Steve Taylor, head of credit solutions in Asia for Aon, said, "When companies take longer to convert their working capital into cash, it can affect their liquidity and profitability. Businesses must identify areas for improving working capital availability and implement strategies such as using credit insurance to protect against the risk of non-payment, support revenue growth, and secure financing. By applying data-driven insights companies can make better decisions to optimise their working capital management and generate significant value for their business."