The working capital study, covering over 900 companies in 21 industries and 12 countries, found that businesses in APAC had an average of 71 days receivable in 2023, a slight increase from the prior year. This delay in cash collection raises concerns about liquidity for companies, particularly in volatile markets.
Longer days receivable reduces available working capital, limiting the ability of businesses to maintain operational flexibility – a growing risk that can increase demand for financial protection products like credit insurance, which can provide coverage for businesses facing delayed receivables, which may help protect cash flows in uncertain economic conditions.
Steve Taylor, head of credit solutions at Aon in Asia, said managing working capital is crucial, particularly when companies face extended payment cycles. Therefore, businesses should consider credit insurance to guard against non-payment risks.
“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,” he said.
The report highlighted that, across the region, there is significant variability in receivables.
Japan improved its receivables by five days, leading the region with an average of 42 days. However, markets like India, with a 100-day average, may require more robust risk management approaches. Delays in cash flow in these markets can increase the importance of both credit insurance and other financial risk products to manage liquidity issues.
Separately, in Aon’s overview of the global insurance market for the second quarter of 2024 (Q2 2024), it was outlined that insurers continue to experience growth due to disciplined underwriting and pricing strategies.
The report noted improvements in the reinsurance sector, and that the market remains well-capitalised, creating a competitive environment for both insurers and clients.
Property insurance markets, particularly in the US, saw favourable conditions for clients, with competitive pricing trends.
For desirable risks, rate increases were minimal, and in some cases, there were low double-digit decreases. In contrast, sectors with higher risks, such as certain industries in Brazil and the Nordics, faced more challenging renewal conditions.
