UK corporates sitting on £69bn cash pile

UNUSED CAPITAL held by UK companies is now worth up to £69bn, according to a Deloitte report.

The report, which looked at the performance of UK companies with a turnover of greater than £60m, discovered the figure is up 8% on the previous year’s £64bn.

The unproductive capital was worth on average 5% of annual sales, with the excess working capital typically tied up in inefficient financial and operational processes.

Andrew Harris, partner in Deloitte’s finance transformation group, said: “The effective management of working capital can easily be overlooked”, and that now “is a good time to focus on managing basic processes”.

More than two thirds of cash is held by the top 11% of UK companies. Combined with inefficient cash conversion cycles, that means that small businesses are hit hardest by unproductive working capital.

Many companies are working on increasing cash conversion efficiency, with 68% of CFO’s involved listing it as a top priority in the next 12 months.

Harris condoned “a range of process efficiencies” and “financial instruments” that could be used in “streamlining excess working capital” which “will enable UK businesses to take advantage of the economic recovery.”

Using excess working capital was highlighted as the most efficient way for a company meet shareholder expectations.