Working capital: a hidden lever for UK mid-market resilience

By Peter Shepherd, Chief Financial Officer at Proactis

As the UK approaches the next Budget, mid-market organisations are watching closely for signs of how government policy will address inflation, growth, and business investment. But while fiscal measures may provide short-term relief, many of the most effective tools for improving resilience lie within businesses themselves.

Chief among these is working capital: the cash tied up in day-to-day operations. In an environment defined by high borrowing costs, supply chain uncertainty and continued cost pressures, managing that cash effectively is becoaming a critical skill for finance leaders.

At Proactis, we see this challenge every day. Working with hundreds of mid-market, service-focused organisations, we know that improving how cash flows through the business, from procurement through to payment, can have a transformative effect on financial health. For many, it is the key to creating stability and the capacity to grow, even in uncertain times.

The mid-market challenge: visibility, control and cash flow

The mid-market plays a vital role in the UK economy but faces unique structural challenges. These organisations often operate with lean finance and procurement teams, and decision-making is typically decentralised. This flexibility allows them to adapt quickly, but it can make financial visibility harder to achieve.

Without joined up systems or standardised processes, spend and supplier data can easily become fragmented. The result is that cash flow forecasting becomes reactive, and working capital is tied up in inefficiencies that are difficult to see or address.

In a period where external finance is expensive and business conditions remain unpredictable, improving control over working capital is one of the most practical ways mid-market businesses can strengthen their financial position.

Improving visibility across the entire spend process can free up significant working capital, giving finance leaders more control over when and how cash is deployed.

Working capital as a strategic enabler for growth

Working capital should be viewed not as an accounting measure but as a strategic lever that enables agility and growth. The organisations that manage it best are those that treat it as a shared responsibility across finance, procurement, and operations; supported by timely data and connected systems.

For mid-market organisations, a stronger approach to working capital management can:

• Release cash that can be reinvested in growth, innovation, or technology.
• Improve forecasting accuracy and support better planning.
• Enhance supplier relationships through consistent and transparent payment cycles.

When margins are tight and economic conditions are uncertain, the ability to generate liquidity internally is one of the most effective ways to protect stability and sustain investment.

How technology and ERP partnerships unlock working capital

A major obstacle to effective working capital management in mid-sized organisations is the lack of fully connected systems. Many already run ERP platforms that provide a solid foundation for financial and operational management. However, these platforms are often part of a wider ecosystem that must work together to deliver complete visibility and control.

That is why strategic partnerships between ERP providers and spend management specialists are becoming increasingly important and are designed to make spend management an integrated part of the financial workflow, not a bolt-on.

By integrating spend management directly within established ERP environments, businesses can automate procurement, purchasing and invoicing, improve data accuracy, and gain real-time insight into commitments and cash flow. This collaborative approach enables finance leaders to make more informed decisions about how to deploy working capital and strengthen financial resilience without adding complexity to their operations. And it allows them to maintain the simplicity and familiarity of their core ERP systems.

Why finance and procurement must collaborate on cash

In many organisations, responsibility for working capital sits primarily with finance. Yet the decisions that shape it often originate within procurement and operations. When these functions share data, objectives, and accountability, the organisation gains a clearer view of its cash position and can act more decisively.

Finance teams can anticipate pressure points before they arise, procurement can negotiate supplier terms that align with cash flow priorities, and the wider business can plan with greater confidence.

Creating this kind of collaboration is as much about culture as it is about process. It means ensuring that everyone who makes or approves spending decisions understands how those choices affect the organisation’s financial flexibility.

Building resilience from within the mid-market business

Whatever direction the Chancellor’s Budget takes, mid-market organisations will continue to operate in a complex and competitive environment. The businesses that perform best will be those that can build resilience from within – identifying opportunities to release cash, streamline operations, and make more confident financial decisions.

At Proactis, we believe that resilience comes from control. By improving visibility, connecting systems, and aligning finance and procurement teams, mid-market organisations can unlock cash that is already within their business and put it to work more effectively.

Working capital, managed well, is more than a financial measure, it is a strategic resource. And with the right technology and partnerships in place, it can help mid-market businesses remain strong, agile, and confident, regardless of the economic climate.