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Opinions and views from expert CFOZone members.

Oct 29

CFOs: Cash flow is top concern

Posted by Stephen Taub in treasurers, TD Bank, controllerschief financial officercash flowCash

Stephen Taub

It's all about the cash flow.

The biggest concern among chief financial officers these days is cash flow. Not the economy, not jobs, not health care, not the elections.

According to a survey conducted by TD Bank, 69 percent of CFOs and other corporate finance managers at mid-sized businesses say they are most worried about the intense challenge of managing cash flow.

The survey of 100 CFOs, controllers, treasurers and other financial executives also found that proper capital allocation and cash flow management will also be next year's top financial management priorities for 41 percent of respondents.

When it comes to cash flow, the survey respondents said the most significant risks over the next year will be an increase in non-performing accounts receivables (21 percent) and reduced sales (19 percent). Only 5 percent of respondents cite the economy as the biggest threat.

While CFOs are worried about cash flow, they are not planning to take drastic action. Just seven percent of the finance executives say they plan to cut expenses in 2011.

In fact, 39 percent expect their capital investments to increase next year. Of that group, 21 percent expect an increase of 10 percent or more.

One-third anticipates that capital investments will hold steady. Of course, this means roughly 28 percent are planning to cut capital investments.

And the most common use for this money figures to be for new technology. This is followed by improvements to existing facilities, workforce hiring and development and office equipment.

What are the most likely constraints on capital investments? The finance pros most often cited cash flow (46 percent), followed by unsure levels of funding from clients and government (18 percent), as well as the political climate, including government regulations and policies (13 percent).

Otherwise, CFOs seem to share the kinds of sentiments most people seem to hold these days. For example, 78 percent acknowledge the economic recovery could take up to two years to materialize while nearly half believe the surest signs of a lasting upturn will be falling unemployment rates, sustained growth in their own organization's sales and an influx of new customers buying their products and services.

Other financial challenges include interest rate volatility, a key concern among more than half of the respondents (55 percent), followed by adequate access to credit for 52 percent.

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