The Cost of Caution: Why CFOs Put Growth Plans on Hold

Name: The Cost of Caution: Why CFOs Put Growth Plans on Hold
Creator: PYMNTS Intelligence
Published: 2026-08-31T08:00:45+00:00

CFOs need strong certainty before committing capital to growth, but even a modest decline can send them into retreat. The latest Certainty Project report follows that change from the executive outlook to the company budget. It reveals how quickly firms respond, which investments they cut first and where they still see room to grow.

For middle market CFOs, business certainty is more than a sentiment measure. It influences and often determines which investments get a green light, and which ones stay on the shelf.

This edition of The Certainty Project shows why certainty is such a powerful leading indicator of growth and expansion. About six in 10 firms whose certainty increased over the past 12 months also increased their capital expenditures. Among firms whose certainty fell, half cut their capital expenditures.

The certainty-capital expenditures relationship isn’t symmetrical, however. To ramp up investment, most CFOs say they would need a high degree of certainty. To turn defensive, the threshold is much lower: More than nine in 10 agree that a small or moderate drop in certainty would be enough.

When uncertainty rises, firms generally reduce spending in targeted areas rather than more evenly across the budget. New investments get axed first while companies protect their ongoing operations. Fifty-eight percent of CFOs say they would cut or postpone capital expenditures, while only 7% would trim maintenance capital expenditures. Hiring and marketing are also early targets.

These are just some of the findings in “The Cost of Caution: Why CFOs Put Growth Plans on Hold,” the latest installment of the PYMNTS Intelligence 2026 Certainty Project. The report is based on a survey of 60 CFOs at U.S. middle market companies with annual revenues between $100 million and $1 billion, conducted July 9 to July 17, 2026. It examines how shifts in business certainty move through capital spending, hiring and investment posture, and what that means for the year ahead.

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The Uncertainty Factor

PYMNTS Intelligence defines “uncertainty” as corporate executives’ self-reported assessments of how unpredictable or unreliable financial, regulatory, market and operational conditions feel across their core operations and finances. These areas include accounts payable and receivable (AP and AR) and collections, cash and liquidity positions, macroeconomic conditions, consumer and customer demand, risk management, compliance and regulatory issues, supply chains, payments capabilities, exchange rates and competitive positions.

Where Firms Stand Today

Certainty has moved unevenly over the past year, shaping how much capital firms have to invest.

Middle market firms fall into three distinct camps. Just over one-third (37%) report an increase in certainty over the past 12 months. An identical share say it held steady and just over one-quarter saw it decline. Company size helps explain the dynamics. Firms with less than $400 million in annual revenue were 2.3 times more likely to report a drop in certainty than those in the $400 million to $1 billion bracket, at 35% versus 15%.

Those differences heavily influence capital spending decisions. Among firms whose certainty improved, 59% increased capital expenditures and only 5% scaled back. But for the firms whose certainty declined, the pattern reverses: 50% slashed capital expenditures and 12% boosted investment. These findings draw a straight line between a CFO’s read on certainty and how their company deploys capital.

Certainty also plays a central role in broader investment posture. About half (48%) of middle market firms describe their current stance as expansionary, well above the one in five that lean defensive. This overall trend diverges sharply by uncertainty level. High uncertainty firms are more than twice as likely, at 38%, to take a defensive stance as low uncertainty counterparts (17%). Industry matters too. Nearly two-thirds (64%) of technology firms report they are expanding, while roughly four in 10 goods (44%) and services firms (43%) say the same.

How Certainty Drives Decisions

Certainty and capital spending move together. The questions are how much certainty firms need to act, how quickly they respond and what gets cut first when challenges emerge.

Middle market firms set a much higher bar for expansion than for retreat. More than half say they need a high level of certainty before committing to expansion. By contrast, 91% say it would take a small or modest decline in certainty to push them defensive.

Firms act quickly once certainty changes. About six in 10 (57%) adjust capital expenditures within three months of a confidence shift, and 90% do so within six months. Hiring moves on similar timelines. Defensive firms move fastest, with about one in three cutting capital spending in the same month conditions change. Expansionary firms are more likely to wait, suggesting they absorb a short-term shift before changing investment plans.

Broad market and macroeconomic conditions (42%) and customer demand (39%) stand out as the most common sources of uncertainty, each named by roughly four in 10 firms. Interest rates and financing costs (23%) and competitive intensity (22%) are also leading drivers of uncertainty. That said, when firms were asked to pinpoint the single most significant source of uncertainty for investment decisions, customer demand (27%) and interest rates and financing costs (22%) stand out as having the biggest impacts.

The Road Ahead

Middle market firms are protecting the operating core and delaying growth capital spending.

Under pressure, firms are more likely to slow expansion than cut into the operating core. Growth capital spending is the first and most common target, followed by hiring and then marketing and sales. Maintenance spending, by contrast, is largely protected. In other words, companies heavily prioritize what keeps the business running today and delay what would make them bigger tomorrow.

That hierarchy matters because next-year plans already reflect the certainty gap. Across the full sample, 47% of firms plan to increase capital spending over the next 12 months, and nearly as many intend to add headcount (42%). High uncertainty firms are considerably more cautious, however, with each rate dropping by about half. Only a quarter plan for more capital expenditures and about one in five (19%) plan to expand their teams.

Interestingly, medium uncertainty companies show the strongest appetite for capital spending, with over 60% planning to invest more. That suggests they remain confident enough in their positions to keep building even as the broader environment remains unclear. Low uncertainty firms sit closer to the overall average on capital expenditures, at 48%, but have the most bullish outlook for hiring, with 56% planning headcount expansion. Put another way, they appear to have made their growth bets in steadier conditions and are now adding the people needed to run what they already started to build.

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Methodology

“The Cost of Caution: Why CFOs Put Growth Plans on Hold,” the latest installment of the PYMNTS Intelligence 2026 Certainty Project, is based on a survey of 60 CFOs conducted July 9–17, 2026. The survey polled executives at U.S.-based companies with annual revenues between $100 million and $1 billion. The report examines how changes in business certainty relate to capital spending, hiring and investment posture.

About

PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists includes leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multilingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.

The PYMNTS Intelligence team that produced this Study:

Ignacio Marquez: Research Analyst
Daniel Gallucci: Senior Writer
Emilia Rizzalli: Research Analyst

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