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Corporate Treasurers Safeguarding Cash As Economic Concerns Loom

Corporate treasurers are building up cash reserves as concerns about the economy grow, according to a new survey conducted by the Association for Financial Professionals (AFP).

The AFP’s latest Corporate Cash Indicators index, released Monday (Oct. 30), hit its highest level since the index was launched in January 2011, demonstrating rising concerns about the global economy among corporate treasurers and financial professionals. In response, treasurers are stockpiling company cash.

In its analysis, the AFP described the rate at which companies are building up cash reserves as “breakneck” in the third quarter of this year. Previous surveys indicated treasurers had planned to build up cash reserves in Q3, but the AFP noted that they did so at a faster rate than previously anticipated.

Forty-two percent of those surveyed said their cash and short-term investment balances were larger at the end of Q3 than they were at the end of Q2, and nearly a third (31 percent) said they plan to continue growing their cash reserves in the next three months. Nearly a tenth of companies surveyed said their short-term investment strategies became more aggressive in Q3.

“Treasury and finance executives are clearly concerned over uncertainty in the domestic and global economy,” said Association for Financial Professionals President and Chief Executive Jim Kaitz in a statement. “In response, they are performing their primary role as safe-keeper of corporate cash, keeping their powder dry until they see a more optimistic economic landscape.”

The findings echoed those of the Q3 2016 survey, in which the AFP also found that corporate treasurers continued to build up cash reserves as they took a wait-and-see approach to their economic growth outlooks, driven mostly by political uncertainty across the globe, analysts said at the time.


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