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May 20
2011

CFOs finally may stop sitting on all that cash

Posted by annearf in expansionDealsCFOsCash

annearf

CFOs around the world are feeling good--good enough to start spending some money.

But they're going to do so carefully.

First of all they seem to feel better than they have in four years. That's according to a study of senior finance executives globally conducted by American Express/CFO Research Global Business & Spending Monitor.

Specifically, 75 percent foresee economic expansion over the next 12 months, the highest level in the four years the study has been conducted. In the US, the figure was 79 percent, although the expectation is for modest growth and is not as high as in a handful of countries. Top on the list of countries expecting growth were Argentina (89 percent), India (87 percent), Mexico (84 percent), Germany (83 percent) and Singapore (81 percent).

They also have a lot of cash. (Duh). Eighty-four percent say their companies have been experiencing strong cash flow over the past year.

But it looks like they're expecting to do something with all that cash they're been squirreling away.

For one thing, they're going to start spending. More than half (54 percent) plan to invest more over the next 12 months in sales and marketing and other business development activities. Forty-eight percent plan to increase their sales headcount.

And they're looking at doing acquisitions. Sixty-nine percent will focus on aggressive M&A activity over the next 12 months.

In addition 63 percent say they're going to use that cash to pay down debt.

But they're also going to be more cautious. Seventy-one percent will conduct more rigorous due diligence of deals. Seventy percent will analyze capital investments more fully.

It would be great for the economy if companies really were to start doing something with that cash, other than sitting on it. Finally.

Comments (1)Add Comment
Steve Treadwell
...
written by Steve Treadwell, May 24, 2011
Owners of small and mid-size businesses should be doing the same sort of strategic analysis with their businesses.
Many remain in survival mode, but it's time to take a step back and re-evaluate the short-term and long-term financial strategy of the business.
Those who feel ill-equipped should engage a profesional consultant or a part-time CFO to help put some context around where the business is today and where they should head next.

www.adifinancial.com

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