Why Belgian companies must look at KPIs differently today
Optimizing working capital and improving cash flow no longer begins today with a single KPI such as Days Sales Outstanding (DSO). Where companies previously focused primarily on how quickly customers paid their invoices, successful organizations today know that cash flow is determined by the interplay of the entire Cash Conversion Cycle: from inventory management and payment terms to invoicing, accounts receivable management, and operational processes within the entire Order-to-Cash chain.
For years, companies could largely manage their cash flow based on a limited number of financial KPIs. The faster customers paid, the healthier the liquidity position. Credit Management revolved primarily around limiting payment arrears and shortening Days Sales Outstanding (DSO).
Today, that approach is no longer sufficient. The economic reality within which companies operate has fundamentally changed. In recent years, businesses have been confronted with successive disruptions to international supply chains, rising interest rates, persistent inflation, and increasing geopolitical uncertainty. Each of these factors ensures that more working capital is tied up in the company, leaving less financial room to invest, grow, or absorb unexpected shocks.
The recent report ‘Cash at Risk – Inventories, Working Capital Strain and Late Payments’ by Allianz Trade confirms what many financial teams experience on a daily basis today: cash flow is increasingly determined less by a single KPI and more by the way the entire Order-to-Cash process is organized.
Perhaps the most striking conclusion from the study is that today, inventory position (Days Inventory Outstanding or DIO) has the greatest impact on the cash conversion cycle. Since 2021, more than 90% of the increase in the cash conversion cycle is explained by changes in inventory levels, while the contribution of DSO has become much more limited. (Source: Allianz Trade, Cash at Risk – Inventories, Working Capital Strain and Late Payments, 2026.)
This does not mean that Credit Management is becoming less important. On the contrary. It does mean that organizations focusing exclusively on getting paid faster are only optimizing one part of a much larger whole.
“The strongest cash flow is not created by chasing invoices faster, but by ensuring that the entire Order-to-Cash process functions optimally.“
That is precisely where the challenge lies for finance organizations today.
After all, cash flow does not arise at the moment a payment reminder is sent. It arises much earlier: when a customer is accepted, an order is entered, an invoice is correctly prepared, and processes align seamlessly.
Those who master this entire chain not only build a healthier liquidity position but also create more predictability, stronger customer relationships, and greater financial agility.
From DSO to Cash Conversion Cycle
That broader perspective immediately explains why working capital is no longer exclusively a financial issue today.
When organizations want to improve their cash flow, the first thing they often look at is outstanding invoices. This is logical: an invoice that is paid faster brings in cash sooner. But that reasoning only starts at the end of the process.
In reality, the quality of the cash flow is determined much earlier.
A customer accepted without a clear credit analysis. An order entered incompletely. Unclear payment terms. An invoice sent days late. A dispute that remains unresolved for too long. A safety stock that becomes larger than necessary. These are all operational decisions that ultimately determine how much working capital is tied up in the company.
In other words: cash flow is no longer the responsibility of a single department today. Sales helps determine how quickly an invoice will be paid through the agreed payment terms. Operations influences inventory levels. Customer Service plays a crucial role in quickly resolving disputes. Finance ensures correct invoicing and structured follow-up. And Credit Management oversees the whole.
That is precisely why more and more organizations no longer speak of Credit Management as a separate discipline, but of Order-to-Cash Management: an integrated approach where all links in the process work together with one common goal: to utilize working capital optimally.
This shift is also becoming visible in the way companies look at performance today.
Where previously a single KPI like DSO often sufficed to assess the health of accounts receivable management, there is a growing realization that one figure cannot possibly capture the full reality. A company can achieve an excellent DSO and still be under pressure because too much capital is tied up in inventory. Conversely, a higher DSO can be the result of a deliberate commercial strategy or international expansion, without endangering financial health.
It is precisely this nuance that the Allianz Trade report highlights. The study makes it clear that working capital today is the result of an interplay of various factors. Days Sales Outstanding (DSO), Days Inventory Outstanding (DIO), and Days Payables Outstanding (DPO) constantly influence each other and together determine the Cash Conversion Cycle. Those who optimize only one of these parameters often miss the greatest opportunities.
Working capital becomes a competitive advantage once again
The evolution of the Cash Conversion Cycle is more than an operational challenge. It also changes the way companies compete.
For years, companies could invest relatively cheaply thanks to low interest rates and wide availability of financing. Holding extra inventory, allowing longer payment terms, or temporarily financing more working capital had a limited impact on the total cost of financing. That reality has since changed.
Today, every euro tied up in inventory or outstanding accounts receivable once again has a clear cost. Higher interest rates make external capital more expensive, while economic uncertainty forces companies to deploy their available liquidity much more consciously. Working capital has therefore evolved from an operational KPI into a strategic source of competitiveness.
The recent PwC Working Capital Study 25/26, based on the analysis of more than 17,000 companies worldwide, reaches a similar conclusion. Although the global figures appear relatively stable at first glance, a concerning evolution lies behind them. Both Days Inventory Outstanding (DIO) and Days Sales Outstanding (DSO) are moving back toward the peak levels of the pandemic years, while companies are increasingly using longer payment terms with suppliers to protect their liquidity position. In Europe especially, net working capital is reaching its highest level in the past decade, driven by an increase of nearly 20% in inventory levels since 2015.
In other words: companies are trying to protect their cash position, but are increasingly doing so by tying up more capital or pushing payment obligations further into the future. This is understandable in the short term; however, it is not a sustainable strategy in the long term.
After all, a company can only pay its suppliers later to a limited extent. Inventory also cannot continue to grow indefinitely without putting profitability under pressure. Ultimately, only one structural solution remains: increasing the speed at which capital flows through the entire organization.
“The best cash flow strategy does not consist of holding onto money longer. It consists of making it circulate faster.” — AAA
That requires a different way of looking at performance. Successful organizations will not distinguish themselves in the coming years by having the lowest DSO or the smallest inventory. They will distinguish themselves by making decisions faster, aligning processes better, and detecting deviations earlier.
Therefore, the Cash Conversion Cycle is increasingly evolving from a historical reporting KPI into a management tool for the future.
The question is no longer how much working capital is tied up today; the question is how quickly an organization notices why it is tied up there and what actions it can take tomorrow to change that.
What does this mean specifically for your organization?
The insights from both the Allianz Trade report and the PwC Working Capital Study lead to the same conclusion: organizations that want to strengthen their working capital must look beyond individual KPIs and scrutinize the entire Order-to-Cash process.
That starts with some fundamental questions:
Do you still primarily look at DSO today, or do you also have visibility into the full Cash Conversion Cycle and the impact of inventory, suppliers, and payment terms?
Do you know where your working capital is tied up today? In accounts receivable, in inventory, in internal processes, or in operational decisions made much earlier in the Order-to-Cash process?
And is cash flow within your organization primarily reported after the fact, or actively managed by Finance, Sales, Operations, and Customer Service together?
Organizations that dare to ask these questions structurally not only build a healthier cash flow. They also create a company that can invest faster, is more resilient to economic shocks, and has more room to seize opportunities when they arise. That is ultimately the essence of a future-oriented Order-to-Cash policy.
