Payment delays, as measured by Days Sales Outstanding (DSO), will increase by +2 days to 66 days in 2020, and by another 2 days to 68 in 2021, it is the highest level over the last decade. After two consecutive years of decrease, DSO will increase twice as much as during the financial crisis, on the back of the Covid-19 cash crisis. As output shrinks and uncertainty rises, companies will use longer payment terms as a commercial strategy to restore market shares.

Global stocks, as measured by Days Inventory Outstanding (DIOs), will increase by +3 days in 2020. The prolonged supply-chain disruption likely due to future targeted lockdowns and the precautionary stockpiling of companies will push inventories up in H2 2020. In the Eurozone, we expect inventories to contribute +1.7pp to real GDP growth in H2 2020 after -0.3pp in H1.

Transportation, automotive, textiles and (non-food) retail should be most liquidity-stressed. They will register the highest increases in WCR in 2020 (above +5 days) and deteriorating profitability, possibly entering distress territory, should they lack support from banks and investors in the coming months. Metals and construction also appear to be very fragile considering their current liquidity positions. In contrast, pharmaceuticals and agrifood are in the best positions.