April 26, 2021 – Bethesda, Md. –Treasury and finance professionals are exhibiting signs of optimism as they enter the second quarter of 2021. Respondents to the AFP Corporate Cash Indicators®, (CCI) a quarterly survey of senior corporate treasury and finance executives conducted by AFP, not only report an uptick in their companies’ performance, but some are also revealing that they are in a position to invest in their organizations.

AFP began collecting quarterly data in January 2011 and has now collected 42 data sets. See www.afponline.org/CCI for answers to frequently asked questions. The next set is slated to be published July 26, 2021. For any press queries, please contact Melissa Rawak at [email protected]

Fully 30% of businesses plan to increase their cash holdings in the coming quarter, while 29% plan to draw down on their cash reserves.

• More than three-fourths of financial professionals attribute the expected increase in cash holdings in the second quarter to improved business performance.
• Another positive indicator is that a third of companies planning to deploy their cash are doing so to invest in their organizations, signaling treasury and finance professionals are leaning towards a more positive outlook as their companies gradually recover from the impact of the pandemic. However, there are businesses that continue to be challenged with worsening business performance, compelling them to deploy their cash to remain viable.
• Forty percent of organizations accumulated cash in the first quarter, primarily due to improved business performance, while others were looking to preserve cash to safeguard against any upcoming uncertainty.

The CCI measure for short-term investment aggressiveness indicated a conservative investment posture during the first quarter of 2021, remaining unchanged from last quarter at -5. These results are based on 121 responses from senior treasury and finance professionals this quarter.

“It has been an extremely challenging year for business and the COVID-19 pandemic caused treasury and finance leaders to resort to fairly severe measures,” said Jim Kaitz, president and CEO of AFP. “However, it is reassuring to see signs of gradual recovery and cautious optimism among treasury and finance professionals as we enter the second quarter.”

“The effects of 2020 will have a fundamental and lasting impact on the global economy, and cash management is no exception,” said Yeng Butler, Head of Investment Solutions and Liquidity Client Group, Wells Fargo Asset Management. “As we all adjust to the post-pandemic environment, we recognize it will take time to build confidence and that liquidity and proactive cash management remain a top priority for many organizations. We are encouraged by the latest CCI survey results and optimistic that many organizations will continue to see improved business performance.”

April 2021 AFP Corporate Cash Indicators®

Change in cash and short-term investment holdings in the past quarter: 1Q21 v. 4Q20 = +6
Change in cash and short-term investment holdings over the past year: 1Q21 v. 1Q20 = +21
Expected change in cash holdings during 2Q21 = +1
Aggressiveness of short-term investments = -5

The indicators measure recent and anticipated changes in corporate cash balances by calculating increase percentage minus decrease percentage.

Each quarter, AFP asks select members representing a broad cross section of U.S. businesses the same questions: whether their company’s short-term holdings increased or decreased in the past year and past quarter; whether investment selections for those holdings changed; and whether they expect cash holdings to increase or decrease in the coming quarter. AFP member companies have agreed to participate in this ongoing study on a long-term basis.

Participants manage their companies’ cash and short-term investment portfolios and are fully aware of their companies’ liquidity needs and business strategies. Since corporate decisions to grow/shrink the size of cash and short-term investment portfolios reflect their business outlook and direction, changes reported by this broad group of companies are indicators of economic activity.

About AFP®

Headquartered outside of Washington, D.C. and located regionally in Singapore, the Association for Financial Professionals (AFP) is the professional society committed to advancing the success of treasury and finance members and their organizations. AFP established and administers the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which set standards of excellence in treasury and finance.