UK Working Capital Opportunity 2016

£28 billion working capital opportunity

Working capital is one of the cheapest sources of cash. We have identified a significant opportunity within the UK.

More volatility in working capital expected over the coming years

UK has done well in recent years to manage working capital in the global comparison. However, over the last decade the UK has been more susceptive to swings in performance. During the uncertainty of the financial crisis UK companies reacted decisively to reduce working capital levels However, these measures were, in the most part, short term tactical initiatives.

The volatile performance suggests the root causes of poor working capital management remain largely unaddressed.

While the last two years have shown a sustained period of improvement, the UK’s decision to leave the European Union means that uncertainty and volatility are likely to increase.


Key findings:

UK NWC and revenue trend

Key findings

Companies in the UK, Europe and beyond, have experienced an improvement in net working capital performance over the last three years. However, the UK’s improvement is more marked.

Looking at working capital drivers, the picture differs across days sales outstanding (DSO), days payables outstanding (DPO) and days inventory on-hand (DIO).

Notably, payables in the UK increased by 27% when compared to 2014, driven primarily by the communications and pharmaceutical sector. 2015 DPO of 54.6  was close to a 10 year high at 54.7 days. This is promising, but judging by historical standards, this may not be sustainable.



UK NWC performance against the world and the EU


On the asset side, DSO and DIO have increased by roughly 10% over the last year. This increase was expected on the receivables side, being driven by the average increase in payables in the UK.

Inventory coverage levels are now close to their 10 year peak, driven primarily by the automotive and engineering & construction sectors, which account for 20% of UK’s inventory.

DSO, DPO and DIO trend in the UK

UK working capital findings

  • Sectors
  • Geographic performance
  • Business size

higher working capital consumption for lower quartile performers.


We reviewed the working capital opportunity across 16 sectors. We found a significant spread in the average number of working capital days. In certain sectors, the lower quartile performers had three times the level of working capital of peers, indicating opportunity to release cash in every sector.

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days more working capital required by companies in the EU

Geographic performance

UK companies have outperformed their European peers in managing working capital, as evidenced by the 10 year average of six more days working capital required by EU companies compared to UK counterparts.

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FTSE 100 companies have improved working capital days by 11% compared to the 10 year average.

Business size

FTSE 100 companies averaged 28 working capital days in 2015, compared to the 40 days of their FTSE 250 peers. However the former appear to be more volatile than the latter in working capital days.

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Contact Us

Daniel Windaus

Partner, PwC United Kingdom

Tel: +44 (0) 20 7804 5012


Glen Babcock

Partner, UK regions, Reading, PwC United Kingdom

Tel: +44 (0) 7711 153 138


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This study provides a view of global working capital performance and is based on the research of the largest 13,000 listed companies worldwide. The financial services, real estate, insurance and government services are excluded. All companies included have a turnover of over €100m. These figures have been downloaded in a standardised format from S&P Global Market Intelligence.

Net working capital % measures working capital requirements relative to the size of company. The basis of the calculation (accounts receivable + inventories - accounts payable) / sales.


Companies have been assigned to countries based on the location of their headquarters.

Although a significant part of their sales and purchases might be realised in that country, it does not necessarily reflect typical payment terms or behaviour in that country.

As the research is based on publicly available information, all figures are financial year‑end figures. Due to the disproportionate efforts to improve working capital performance towards year‑end the real underlying working capital requirement within reporting periods might be higher. Also, off‑balance‑sheet financing or the effect of asset securitisation have not been taken into account.