The £24 Billion question: Why Britain's capital-intensive companies are fighting with one hand tied behind their back
A data-driven examination of working capital inefficiency across UK industrial sectors, the systemic limitations holding back even the best performers, and what can be done to solve it.
Dr Jamie Ballin, Founder and Chief Innovation Officer
5th December 2025
$1.1tn
Potential Cashflow
Capital that could be released with better cash management (Hackett, top 1000 US public companies).
+48%
NWC Days Increase
Rise in the UK since 2015 (PwC).
£24.6bn
Potential Cashflow
From 41 UK companies in 6 capital-intensive sectors
£850m
Average per company
Possible improvement for companies to perform as well as the best in their sector
When The Hackett Group published their research on working capital management, they revealed a truth that many CFOs already suspected: there are billions in cash tied up unnecessarily in company balance sheets. They found potential for $1.1tn of capital to be released from the top 1000 companies, a value similarly confirmed by analysis by pwc, who further showed that net working capital days in the UK have risen by 48% since 2015. Our analysis of 41 British companies across six capital-intensive sectors confirms this isn't just an American phenomenon—it's a UK crisis hiding in plain sight.
"Inventory has become the silent absorber of uncertainty … we have seen a shift from 'just in time' to 'just in case' to 'just because' stocking – tying up cash and increasing waste, as well as creating unintended inefficiencies."(pwc)
The numbers are staggering. Across House Construction, Engineering & Infrastructure, Aerospace & Defence, Pharmaceuticals & Biotech, Industrial Manufacturing, and Basic Materials & Chemicals, we identified approximately £24.6 billion in potential cash flow release—simply by bringing underperforming companies up to best-in-class standards within their own sectors.
For the 29 companies in the lower performance tranche, the average opportunity is £850 million per company. This isn't about radical transformation. It's about achieving what peer companies in the same sector, facing the same market conditions, have already accomplished.
The performance gap is real - and measurable
Pharmaceuticals & Biotech
With £90.2 billion in combined revenues, this sector faces the most dramatic inefficiency. The lower-tranche companies have an average Cash Conversion Cycle 74 days longer than best performers. The result?
£7.2bn
Potential Cashflow
£1.8bn
Per Company
But it's not unique …
The pattern holds across all six sectors we studied, from House Construction (£7.1 billion opportunity) to Aerospace & Defence (£7.0 billion) to Basic Materials & Chemicals (£731 million). The scale varies; the story is the same.
The real question: what do the leaders know that the others don’t?
If there's a £24 billion gap between best and worst, the obvious question is: what do the leaders know that others don't?
To answer this, we need to recognise what working capital management actually is: a forward-looking problem. Cash Conversion Cycle isn't a historical metric you observe—it's the lived experience of when cash will arrive from customers, when it must leave to pay suppliers, and what exposure exists in between. Optimising it means anticipating payment behaviours, spotting risks before they materialise, and intervening while there's still time to act. It requires seeing the future, not just recording the past.
Yet the tools available to finance teams—ERP systems, accounting ledgers, even sophisticated BI platforms—are fundamentally backward-looking. They excel at recording what has happened. They struggle to represent what might happen, when, and with what likelihood.
You cant solve a forward-looking problem with backward-looking data.
The companies that lead their sectors in working capital performance haven't been gifted calmer waters. They operate in the same volatile, uncertain markets as everyone else—facing the same supply chain disruptions, the same customer payment variability, the same competitive pressures. What distinguishes them is that they've bent their backward-looking tools to serve a forward-looking purpose, through sheer force of investment.
Microsoft deployed some of their brightest leaders and a team of data scientists for over a year to improve their sales and cash flow forecasting. Porsche maintains a dedicated treasury data science team working continuously with AI tools to forecast cashflow. These are multi-million-pound, multi-year investments in making retrospective systems yield forward-looking insight—investments that most organisations simply cannot replicate.
For the majority of finance teams, a high-level difference-to-forecast once a month remains the limit of C-suite insights into cash performance. And even this only states "what", seldom "why" – which incurs material effort.
And even the leaders face a ceiling. Their bespoke solutions still start from retrospective data. They still require manual reconciliation between operational reality and financial records. They still struggle to represent uncertainty natively. The best performers have achieved excellence despite their tools, not because of them.
What becomes possible when data is forward-looking by design?
The challenge facing CFOs and Treasurers isn't a lack of commitment to working capital improvement. What's needed is a fundamental shift in how financial data works:
- Complete: See what is missing, not just what has been entered. Current systems can only report on transactions that have been posted. But the cash flows that will define your position next month are already taking shape in orders, contracts, and operational decisions that haven't yet reached the ledger.
- Forecasts emerge naturally from operational reality: not from manual extrapolation of historical trends. You don’t have to manufacture a forecast. And because the forecast is grounded in actual business processes, it's accountable—you can always ask what was known, when, and whether the projection proved accurate.
- Always up to date: No more snapshots, no more monthly update cycles. As operational reality evolves, the financial view evolves with it. The forecast you see today reflects what is known today.
- Realistic: Forecasts that don't degrade after two weeks. By representing uncertainty explicitly rather than hiding it behind buffers, the view remains useful across a meaningful planning horizon.
- Actionable: Know which transactions are at risk and why. Not just that an invoice is late, but whether it's a customer dispute, a shipping delay, or a systemic issue with a particular segment—and what can be done about it.
- Strategic: See how decisions taken today translate into business performance tomorrow. Connect operational choices to their downstream financial consequences before committing, not after. This is how the working capital question – and hundreds of others like it – is answered.
At Intelligent Lagoon, we're improving enterprise data systems so that they are forward-looking by design, so that data obtained from them has these characteristics. Then everyone can benefit, not just those who have enormous resources to solve the problem. And even those that do, can do it better.
The path forward
The companies that close this gap won't do so by working harder within existing constraints—or by building Microsoft-scale data science teams. They'll do it by transforming how financial data works: making it forward-looking, operationally aware, and immediately actionable.
For treasury leaders and CFOs in capital-intensive sectors, this is more than an efficiency question. In an environment of elevated interest rates, tighter credit conditions, and increasing demands from boards and investors for capital discipline, releasing trapped working capital isn't just an opportunity—it's a strategic imperative.
The question isn't whether the opportunity exists. Our analysis—and the work of Hackett, PwC, and others—proves it does. The question is: what would it mean for your organisation if cash visibility required insight rather than heroics?
This analysis is based on public financial data from 2024 from 41 UK companies in the FSTE 100 and FTSE 250 across six capital-intensive sectors: House Construction, Engineering & Infrastructure, Aerospace & Defence, Pharmaceuticals & Biotech, Industrial Manufacturing, and Basic Materials & Chemicals. Cash release potential was calculated by comparing lower-tranche performers against the best two companies in each sector, based on Cash Conversion Cycle metrics.
Sources
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