"At a time when the country is struggling to achieve meaningful growth, some very simple changes to corporate payment systems could unleash £55 billion worth of working capital. Just think what businesses could do with that kind of money to fund investment, expand into new areas and upskill staff. In this day and age, there really is no excuse for waiting three days to receive a payment."
"Navro's study, The £55 Billion Payment Dividend, assessed publicly available data from the Office of National Statistics and found that £55.8 billion is locked up each year in idle capital due to the inefficiencies of business payment systems - this, despite all the fintech investment in recent years to tackle such issues. The sum of £55.8 billion could be released by: Eliminating the 2-3 day payment lags common in commercial transactions. Irrespective of the specific contractual payment terms, many payments still take 2-3 days to arrive in the recipient's bank accounts after the payment has been processed."
UK businesses could unlock £55.8 billion of working capital each year by modernising corporate payment systems, equal to roughly 2.3% of GDP. Idle capital accumulates because many commercial payments still take 2–3 days to arrive after processing and because firms hold excess liquidity in suspense or nostro accounts as buffers. Eliminating payment lags and reducing unnecessary buffers would release capital for investment, expansion and staff upskilling. Publicly available Office for National Statistics data indicates that £55.8 billion is a conservative estimate and that up to £167 billion could be accessed through bolder optimisation of payment processes and liquidity management.
Read at London Business News | Londonlovesbusiness.com
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