Corporate Investment Is Beginning, AFP Liquidity Survey Shows

By Association For Financial Professionals, PRNE
Monday, June 27, 2011

WASHINGTON, June 28, 2011 -

- About 30 percent of finance pros
are putting cash to work in growth initiatives

A trickle of corporate cash has begun flowing into investment
projects such as acquisitions, business launches and other capital
expenditures, according to a survey released today by the
Association for Financial Professionals (AFP). About thirty percent
of corporate finance executives say that in the last 12 months
their organizations have begun to use the cash that had been
accumulating on the sidelines for the last six years.  

The 2011 AFP Liquidity Survey ( href="">,
underwritten by Citi, represents the sixth time AFP has conducted
this annual survey of CFOs, treasurers and other financial
executives.  The percentage of organizations currently
reporting a decline in cash reserves is the largest in the survey’s

Although the main reason for a decline in cash was a decrease in
operating cash flow stemming from the recession, AFP noted that
thirty percent of reporting executives specifically indicated that
that their organizations had begun to put cash to work in growth
initiatives. This change in behavior represents a small but
noteworthy departure from AFP’s previous liquidity surveys.

“While the survey shows very conservative behavior, we believe
it provides hope for intermediate term prospects,” said Jim Kaitz,
AFP’s president and CEO.  ”Some companies are beginning to
spend cash to build their operations. Others are seeing cash levels
rise because their business picture is improving.  As
companies find opportunities to deploy this cash in the coming
months, we will see the economy gain some momentum.”

For many of the companies that did increase cash reserves, their
rationale reflects an improved business climate: About 56 percent
of organizations that increased cash holdings did so because their
operating cash flow had improved. This is in contrast to last
year’s survey, which found that the organizations that increased
cash holdings did so to “maintain operations and get through the
recession” or “for working capital improvement.”

“We are heartened by the encouraging signs revealed in the
survey, which show that treasurers are seeking opportunities for
enterprise-wide liquidity efficiency, while still emphasizing a
diversified investment portfolio,” said Elyse Weiner, Head of
Global Liquidity & Investments with Citi’s Global Transaction
Services. “As a sponsor of this year’s survey and a world leader in
liquidity management solutions, Citi has long supported companies
as they expand their global footprint. Our latest technological
advances will provide companies with important opportunities to
manage their global cash more effectively.”

Looking ahead, executives remain cautiously optimistic. About 24
percent of net investor organizations and about 26 percent of net
borrower organizations say they expect to further reduce cash
reserves in the coming year. Of those, 42 percent expect to
increase spending, 23 percent expect to pay back debt and 16
percent expect to acquire a business or launch a new operation.

Of respondents who think their cash holdings will expand, the
vast majority (82 percent) believe the expansion will be due to
better operating cash flow.

Within the U.S., organizations typically hold cash in bank
deposits, money market mutual funds and U.S. Treasury securities.
 Outside the U.S., they typically place it in bank deposits,
the survey found. The survey also covered changes by international
region as well as short-term investment policies and vehicles.

AFP conducted the survey in May 2011, generating 364 responses. The
survey respondents were senior finance and treasury executives from
a broad range of companies - typically U.S.-based multinationals
with a median of $2 billion in revenue.

Download key findings from the AFP 2011 Liquidity
on href=""> 
Journalists may contact +1-301-907-2862 or href=""> for a full copy
of the research.

ABOUT AFP® ( href="">

The Association for Financial Professionals (AFP) is the daily
resource for a network of more than 16,000 treasury and finance
professionals. Headquartered outside Washington, DC, AFP provides
members with news, economic research and data, treasury
certification programs, networking events, financial analytical
tools, training, and public policy representation to legislators
and regulators.

AFP’s global reach extends to over 150,000 treasury and
financial professionals worldwide, including AFP of Canada;
London-based gtnews, an on-line resource for the treasury and
finance community; and bobsguide, a financial IT solutions

Dave Johnson, Media Specialist, Association for Financial Professionals, +1-301-907-2862, pr at

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