Coming into 2020, company treasury professionals have been anxious. After we revealed the Treasury & Danger “2019 Cash Management Survey” final November, it appeared that “uncertainty in the global economy [was] causing businesses to entrench and build their cash reserves to weather any financial downturn,” in keeping with Hung Nguyen, director of gross sales North America for BELLIN.
Certainly, that’s what the information confirmed. Over the course of 2019, cash reserves had grown in 42 % of organizations, and had grown by greater than 10 % in 2 out of 10 corporations. In the meantime, cash holdings had decreased in solely 22 % of organizations. Stockpiling cash appeared to be a precedence for a lot of companies late final yr.
Then, when requested which single issue they anticipated to have essentially the most impression on cash reserves over the upcoming yr, respondents chosen “uncertainty in global business climate” as their third-most-prevalent selection. Among the many 5 % who chosen “Other,” a number of wrote in solutions akin to “anticipation of a recession in the next year” and “potential for a recession.” Little did they know what 2020 would entail!
Even the pessimists who took the survey in early autumn of 2019 couldn’t have predicted the havoc Covid-19 would wreak on the worldwide economic system. Nonetheless, their expectations have been nearer to actuality than these of the quarter of respondents who believed final yr that will increase in working cash flows could be the biggest driver of their firm’s cash reserves in 2020, or the eight % who noticed growing capital expenditures as the largest influencer of their degree of cash holdings. (See Determine 1, under.) It appears unlikely that very many companies have seen jumps in working cash flows or capex over the previous six months.
Realizing what we all know in the present day, these outcomes are fascinating. That’s why we at Treasury & Danger are excited to collect solutions to the identical questions this yr—to see how companies’ liquidity administration practices are altering in response to the Covid disaster. How are company treasury groups revising their funding insurance policies for administration of cash and short-term investments? Have they been in a position to proceed growing cash holdings this yr, or are they now drawing down their firm’s cash reserves? And the way are they allocating cash amongst their totally different funding choices?
Whether or not or not you participated in final yr’s survey, we invite you to spend 15 minutes answering this yr’s questions. Responses shall be compiled and analyzed solely at an aggregated degree. And when you contribute your insights, you’ll obtain our unique survey report with the complete outcomes, and shall be entered to win a $200 American Categorical present card.
Assist us construct our data base of present cash administration practices, and we’ll show you how to benchmark your response to the Covid-19 disaster towards that of your opponents and friends. Take the “2020 Cash Management Survey” in the present day!