As revealed in J.P. Morgan’s Working Capital Index 2024, S&P 1500 companies are facing an alarming slowdown in working capital efficiency – with the cash conversion cycle (CCC) stretching by 2.4 days, driven by rising Days Sales Outstanding (DSO) and Days Inventory Outstanding (DIO).
This has locked away roughly $707 billion in trapped liquidity, marking a painful 40 percent rise from pre‑pandemic levels.
Yet, hidden within these challenges lies a strategic opportunity. By optimizing receivables, inventories, and payables, corporates could unlock hundreds of billions in working capital -fueling growth, boosting resilience, and fortifying financial agility
Want the full picture?
Read J.P. Morgan’s Working Capital Index and explore all the findings
Access the report on JPM’s website below:
J.P. Morgan’s Working Capital Index 2024 shows U.S. corporates are holding $707 billion in trapped cash, with the cash conversion cycle worsening by 2.4 days.
Receivables and inventories are rising, while sectors like semiconductors, pharma, and oil & gas face mounting liquidity pressure.
The study highlights a huge opportunity: by improving receivables, payables, and inventory, companies could free up hundreds of billions in working capital for growth and resilience.
1. $707 Billion of Trapped Working Capital
2. Cash Conversion Cycle Is Worsening
The overall CCC increased by 2.4 days in 2023. This deterioration stems from:
3. Leading Industry Pain Points
Some industries saw dramatic CCC increases:
These shifts are driven by surplus inventory, extended payment terms, and normalization of demand.
4. Sector-Level Cash Constraints Amid Rising Capex
5. The Unlockable Opportunity
Moving up just one performance quartile could free:
In total, over $707 billion could potentially be unlocked as free cashflow.
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1. Benchmark Key Metrics
Compare your DSO, DIO, and DPO against leading peers and sector norms.
Benchmarking highlights where you are lagging, quantifies the gap, and shows where the biggest improvement opportunities lie.
2. Prioritize Inventory and Receivables Optimization
Receivables and inventory are the largest sources of trapped cash.
By tightening collections and improving stock management, companies can unlock significant liquidity faster than by focusing only on payables
3. Align Capex with Cash Availability
With many firms increasing capital expenditure, aligning investment plans with available cash is critical.
Optimizing working capital ensures that growth initiatives remain agile and don’t strain liquidity.
4. Tailor Actions to Sector Dynamics
Working capital challenges vary by industry – semiconductors, pharma, and oil & gas face especially high cash conversion cycles.
Adapting strategies to sector-specific realities ensures more targeted and effective improvements.
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