Categories: B2B Payments

US Corporate Cash Stockpiles Spiked In Q4

U.S. corporates ramped up their cash accumulation during the fourth quarter of 2019, a sign of a cautious approach to the economy, new research from the Association for Financial Professionals (AFP) said on Monday (Jan. 27), per a report from Yahoo! Finance.

The AFP released its Corporate Cash Indicators (CCI) report, which surveys corporate treasury and finance professionals on a quarterly basis. The Index jumped 22 points to +31 in Q4 compared to Q3 and increased 13 points year over year. The figures mark the report's highest volume of cash accumulation in its eight-year history.

The cash stockpiling was not entirely unexpected. Researchers noted that corporate finance professionals had signaled plans to increase cash reserves and short-term investment holdings at the start of Q4, though the report found that they did so at a faster-than-expected pace.

While the findings signal caution among U.S. corporates headed into the New Year, early figures from the AFP suggest strengthening optimism and plans for financial executives to be deploying more cash as the first quarter progresses.

"Late last year, uncertainty over Brexit in the U.K., impeachment in Washington and the trade dispute with China led financial professionals to [tighten] their grip on cash in anticipation of adverse impact on their businesses," said AFP President and CEO Jim Kaitz in a statement. "However, with the first phase of the trade deal with China done and the U.K. elections signaling a clearer path for Brexit, business leaders may begin to gradually mobilize cash in early 2020."

Last week, reports in Reuters warned that corporate forecasts in the U.S. were wavering as executives struggled to remain optimistic. FAANG (Facebook, Apple, Amazon, Netflix and Google) shares all declined last week, with markets tripping over several missed earnings forecasts and muted outlooks. Reports pointed to an array of factors behind the trend, including previous reports that the White House would cancel plans to hold trade talks with China.

The International Monetary Fund had also recently cut its global economic forecasts.

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