British businesses sitting on £600bn that could be used to fund growth

Industry News | 18/06/19

18 June, 2019/in Commercial Credit /by Stephen Kiely
British businesses could have £593 billion locked up in excess working capital, potentially hampering growth and leaving them exposed to economic uncertainty, according to new research from Lloyds Bank Commercial Banking. The Lloyds Bank Working Capital Index combines the bank’s proprietary research and IHS Markit’s UK Purchasing Managers’ Index (PMI) data to calculate the working capital pressures businesses are under.

Analysis of nearly 9,000 firms revealed a total of £142 billion is tied up in working capital, a £15 billion rise on last year and a £41 billion hike on 2015. When compared against historical and industry best levels of cash flow efficiency, and extrapolated across UK businesses with more than 50 employees, this equates to £593 billion of excess working capital. Working capital, the amount of money that a company has committed to the day-to-day costs of doing business, includes overheads such as stock and unpaid invoices.

Source: Lloyds Banking Group