UK firms lose £125bn from poor working capital management

BRITISH firms have failed to free up £125bn over the last five years due to inefficient working capital management, according to research released today by accountants PwC.

PwC found that if all the UK companies currently considered to have bad working capital management achieved the same standards as good performers they could have potentially generated cash to the tune of £125bn.

Working capital performance is a measure of efficiency that compares a firm’s assets to its liabilities.

“Successful companies move away from short term year-end window-dressing towards more sustainable levels of good performance, where every day key decisions are made with cash in mind,” said Simon Boehme, PwC’s senior manager for working capital management. “Put simply, those organisations with an embedded cash culture fare better.”

The survey studied Europe’s largest 4,000 companies with a turnover of more than £150m.