UK corporates miss cash returns as onboarding stalls

UK corporates hold an average of £1.12 billion in cash, according to research from MillTech, and 82% believe they are missing out on income by not optimising it.

The survey of 125 senior finance decision-makers found companies formally review where excess cash is held or invested an average of 63 times a year, or more than once a week. Even so, 80% said they were concerned they might not be achieving the best available returns on excess cash, and 78% believed better returns were achievable.

The findings suggest a gap between oversight and execution in corporate treasury operations. Finance teams appear to monitor cash positions frequently, but many say practical barriers prevent them from moving balances into products or providers that could offer higher returns.

Among the biggest obstacles, 38% cited opening accounts for money market funds. A lack of visibility across accounts was named by 35%, while 33% pointed to limited time or internal resources.

Onboarding was another recurring issue. Respondents said it takes an average of 3.2 months to onboard a new cash management provider or money market fund. Lengthy compliance and due diligence processes were cited by 46%, and legal documentation requirements by 45%.

That friction appears to directly affect how widely companies diversify their cash relationships. Almost all respondents (98%), said onboarding complexity discourages them from adding new cash management providers. The same proportion said they would be likely to add more cash investment partners if the process were faster and simpler.

Cash allocation

The research also showed how companies have adjusted their cash strategies in response to a more uncertain external environment. Respondents said trade tensions, regional instability and market uncertainty had led them to move more cash into balance sheets, Treasury bills and government securities, and money market funds.

All respondents reported moving more cash into Treasury bills and government securities and money market funds, while 98% said they had shifted more cash onto balance sheets. The data suggests a broad preference for liquidity and lower-risk instruments during periods of market stress.

At the same time, cash allocations were spread relatively evenly across several instruments. Average allocations stood at 24% each for money market funds, repos, bonds, and Treasury bills and government securities, while bank deposits or uninvested cash accounted for 23%.

More than nine in 10 respondents said they held cash across each of those main categories. That distribution suggests many treasury teams already use a mix of instruments rather than relying on a single home for surplus cash.

Automation trend

The survey found automation is now common in cash management and liquidity processes. Nine in 10 companies said they automate at least part of those activities, including 34% that described their processes as fully automated.

Technology investment is also shaping expectations for the next phase of treasury management. Asked which developments would have the biggest impact on cash management over the next five years, 42% selected AI-driven liquidity optimisation, ahead of real-time data and analytics at 37% and automation platforms at 34%.

The figures suggest finance leaders see better data and system integration as central to improving cash management decisions. They also reflect how treasury functions are becoming more technology-dependent as teams seek faster visibility across accounts, entities and counterparties.

Money market funds could be among the main beneficiaries if those operational hurdles are reduced. The survey found 93% expect their organisation's use of money market funds to increase over the next two years, including 31% who expect a significant rise.

Neil Gallacher, Co-Head of Cash Management Solutions at MillTech, said: "Where cash sits has never been more pertinent. Inflation, interest rates and geopolitical disruption have pushed questions around the returns cash generates and how quickly it can be moved higher up the CFO agenda. With corporates holding significant sums, optimising excess cash has become an essential part of protecting value and improving financial performance."

Matt Shapcott, Co-Head of Cash Management Solutions at MillTech, said: "While corporates are reviewing their cash positions regularly, execution is still falling short. The bigger the treasury operation, the harder it becomes to move quickly across multiple accounts, entities and providers. What firms need is technology that enables faster onboarding, better visibility and more connected processes, so they can effectively turn cash oversight into action."