Payment Practices in Germany Are Deteriorating: What Does This Mean for Businesses?
The latest study by Allianz Trade, the world’s leading credit insurer, paints a concerning picture: Payment behavior in Germany continues to deteriorate. Companies are having to wait longer to get paid, even though they pay their suppliers faster than the Western European average. But what is driving this trend, and how does it affect companies’ liquidity and resilience?
Current Developments: Longer Wait Times, Higher Inventory Levels
According to the study, the “cash collection cycle” (CCC)—that is, the time it takes companies to convert funds disbursed into funds collected—will have worsened by nearly two days to 79 days in Germany by 2025. That is 16 days longer than the average in Western Europe, which stands at 63 days. The computer/telecommunications, electronics, paper, and pharmaceutical industries are particularly affected.
There are many reasons for this trend. For one thing, payment behavior has deteriorated: “Days Sales Outstanding” (DSO)—that is, the average time it takes for invoices to be paid—rose in Germany by 2.8 days to 55 days. Second, increased inventory levels have raised “Days Inventory Outstanding” (DIO)—the time goods spend in inventory—by 0.9 days to 58 days. Companies are increasingly relying on “just-in-case” resilience rather than “just-in-time” efficiency to mitigate supply chain risks. At the same time, “Days Payable Outstanding” (DPO)—the time it takes companies to pay their own suppliers—has increased by 1.9 days to 35 days, but remains 14 days below the Western European average.
Outlook for 2026: Further Deterioration Expected
Allianz Trade forecasts a further increase in the CCC of 4 days to 83 days by 2026. The reason for this lies in the limited leeway German companies have to offset cash outflows by extending payment terms to suppliers. A similar trend is evident globally: Worldwide, the CCC is rising to 67 days (2025), driven by higher inventory levels, which account for nearly 80% of the CCC.
As Maxime Lemerle, Head of Insolvency Research at Allianz Trade, explains: “Inventory levels now account for nearly 80% of the CCC score. Companies are shifting away from ‘just-in-time’ efficiency toward ‘just-in-case’ resilience.” Geopolitical uncertainties and supply chain disruptions are leading companies to prioritize security and flexibility in the supply chain over cost efficiency.
Global Perspective: What’s Driving the Trend?
The global DIO rose to 53 days (2025), well above the pre-pandemic level (48 days). Global DSO stands at 56.5 days and has remained stable since 2022. Further challenges are expected in 2026: The U.S.-Iran conflict could drive the DIO even higher in affected sectors, while investments in AI infrastructure and data centers could cushion the rise in the CCC in some industries, such as IT and telecommunications. Overall, the global DIO is expected to rise by 2 days, which will increase the CCC by an additional 1.16 days.
Conclusion: Liquidity vs. Resilience—A Balancing Act
The Allianz Trade study highlights a paradigm shift: While liquidity is suffering because longer payment terms and higher inventory levels are tying up capital, resilience is becoming increasingly important. Companies are accepting higher costs in order to gain greater security in uncertain times.
The recommendations for companies are clear: Liquidity management must be optimized by closely monitoring DSO and DIO. At the same time, supply chains should be diversified to reduce dependencies and spread risk. Last but not least, it is important to build financial buffers to ensure flexibility in the face of unforeseen shocks.
