Large UK companies sitting on £244 billion in working capital

13 October 2016

Improving economic conditions across the UK, as well as keen focus on improving working capital efficiencies, has seen total cash on hand of the country's largest companies rise by 14% since 2010 – now totalling £244 billion. Further improvements to cash reserves by focus on best-practice in Cash to Cash days performance, may create indirect benefits to the UK economy as a whole if returns are effectively re-distributed to companies needing capital for growth.

In a new study from Grant Thornton, titled ‘The UK's cash conundrum’, the firm leverages the Fame database for information regarding the working capital conditions of 2,929 companies, excluding financial services, with revenue of at least £100 million. Through the study, insight is drawn into working capital performance changes.

Cash reserve boost

Uneven growth

While working capital improvements have been booked at a number of companies in a sustainable manner, others, the research highlights, continue to see improving working capital as a ‘project’ – done to ‘massage the books’ or as a means to structuring debt repayments. The firm notes that such ‘tactical’ projects, while meeting short term goals, may damage long-term sustainability by, for instance, irritating suppliers through late payment.

The research highlights that there is considerable variation between top performers (top 10%) and other companies. The companies that focus on implementing best-practice working capital procedures are correlated with improved revenue generation (up 3% compared to 1%) and EBIT margin percentage growth over the same period (up 11% compared to a -2% decrease). Meanwhile, their debt increased by a much lower percentage (9% vs. 12%).

UK five year trend in C2C days

UK five year trend in CSC days

The study results do show a relatively positive trends across UK business towards Cash to Cash days (C2C) improvement. Since 2010 C2C days have fallen from 31.7 to 28.7, delivering considerable boosts to cash reserves. In the past year, for instance, a 0.6 day decrease added £17.2 billion in net working capital.

The analysis also finds that companies have managed to improve their receivables slightly (0.7%) between 2014/15, to 51.3 days. The results are still well outside the average UK terms of 45 days, suggesting considerable improvements can still be made. The biggest improvement however, stems from a reductions to inventory holdings of 1.2% between 2014/15, to an average of 30.9 days. Payables saw slight deterioration of 0.2%, due to, the firm says, the end of the low hanging fruit optimisations that drove previous years’ gains.

YoY % change in C2C days

Changes in CSC days

There are considerable differences between large, medium and small companies in terms of year-on-year changes in C2C days. Small companies see minor improvements of around 2%, while large companies manage to generate the highest improvements at 14%. Medium sized firms, however, face difficulty pushing through best-practice, resulting in a 3% deterioration. The consultancy firm notes that the deterioration may have affected EBIT margin percentages at medium size companies, given their 2.9% drop, compared to 0.2% for small companies and 0.6% for large companies.

C2C quartiles by sector

The research in addition sought to identify major trends between the C2C quartiles for different sectors, finding that considerable disparity exists even within sectors. In the pharmaceuticals industry the difference between top and bottom performers stood at 64 days, while for industrial products it stood at 53 days.

Capital to work

The consultancy firm notes that freeing up and leveraging additional working capital, even with the current £244 billion sitting on balance sheets, has the potential to drive considerable growth for businesses across the UK if that capital were to be released (or redistributed) to support the needs of fast-growth, dynamic corporates – potentially ‘super-charging UK economic growth’.


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Project management industry adds £156 billion of value to UK economy

15 April 2019

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.


Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”