July 26, 2021 — Bethesda, Md. — During the second quarter of 2021, U.S. businesses continued to build their cash and short-term investments at a significantly higher rate than the previous quarter, according to the AFP Corporate Cash Indicators® (CCI), a quarterly survey of senior corporate treasury and finance executives conducted by AFP. While treasury and finance professionals are currently in a stronger financial position compared to last year, they continue to be cautious with their cash holdings due to future uncertainty.

Some key findings from the July CCI:

• Fifty-six percent of organizations held larger cash and short-term investment balances at the end of Q2 2021 than the previous quarter, primarily due to improved business performance, while 13% reduced cash holdings due to worsening business performance.
• Fifty-nine percent of organizations held greater cash and short-term investment balances at the end of Q2 2021 than they had one year earlier, while 14% held smaller cash balances relative to a year ago. The difference of 45 is 16 points higher than the July 2020 reading, indicating a faster pace of cash accumulation than a year ago.
• Thirty-four percent of organizations anticipate increasing cash and short-term investment balances over the next three months. This result was shown in the forward-looking indicator of +8, which increased 7 points from last quarters reading. Organizations planning to increase their cash balance during Q3 are doing so primarily due to improved business performance.

These results are based on 101 responses from senior treasury and finance professionals this quarter.

“It is challenging to predict what the future holds, and it is not surprising that treasury and finance professionals continue to be cautious with their organization’s cash and investments,” said Jim Kaitz, president and CEO of AFP. “However, it is encouraging that with the gradual post-pandemic healing, organizations are reporting stronger results and moving in the right direction.”

“Consistent with this quarter's CCI survey results, we are finding that our clients are focused on preserving and in a notable number of cases, increasing cash and short-term investments in an effort to safeguard against future uncertainty,” said Yeng Butler, Head of Investment Solutions and Liquidity Client Group, Wells Fargo Asset Management. “That said, stronger business performance and an improving economic outlook offer signs of optimism heading into the second half of the year.” 

July 2021 AFP Corporate Cash Indicators®

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Change in cash and short-term investment holdings in the past quarter: 2Q21 v. 1Q21 = +43
Change in cash and short-term investment holdings over the past year: 2Q21 v. 2Q20 = +45
Expected change in cash holdings during 3Q21 = +8
Aggressiveness of short-term investments = +3

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

Each quarter, AFP asks senior select treasury and finance professionals 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.

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.

AFP began collecting quarterly data in January 2011 and has now collected 43 data sets. See www.afponline.org/CCI for answers to frequently asked questions. The next set is slated to be published October 25, 2021. For any press queries, please contact Melissa Rawak at [email protected].

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.