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US treasurers cautiously optimistic entering Q2 2021

Treasury and finance professionals are exhibiting signs of optimism as they enter the second quarter of 2021, according to the Association for Financial Professionals (AFP) April 2021 Corporate Cash Indicators (CCI), underwritten by Wells Fargo Asset Management. 

Respondents to the 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 organisations.

Cash management plans for Q2

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

Two in every five organisations (40%) 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.

"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."

A conservative approach to short-term investments

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.

"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 at Wells Fargo Asset Management. "As we all adjust to the post-pandemic environment, we recognise it will take time to build confidence and that liquidity and proactive cash management remain a top priority for many organisations. We are encouraged by the latest CCI survey results and optimistic that many organisations will continue to see improved business performance."


Each quarter, AFP asks select members representing a broad cross section of US 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.

AFP began collecting quarterly data in January 2011 and has now collected 42 data sets. The next set is slated to be published July 26, 2021.

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