CFOs Worry About Lack of Suitable Repositories of Cash Amid Growing Cash Balances

The proportion of companies that have increased their cash balances has grown by 6% year-over-year (YoY) since 2011, according to a global survey conducted by SunGard.

Given the consistently high and growing cash balances, the lack of suitable repositories of cash was the greatest concern among corporate treasurers, noted by 31% of respondents.

The proportion of respondents that need immediate access to all cash fell from 46% in 2013 to 33% in 2014, suggesting that treasurers are starting to review and refresh their investment policies and are in a better position to manage a wider range of instruments.

Bank deposits remain the most commonly used instrument and money market funds (MMFs) remain popular, while variable net asset value (NAV) funds and commercial paper are becoming more popular.

The use of electronic dealing portals for short-term cash investments remains strong this year at 60%.

“As the prospect of rising interest rates remains flat, companies that continue to generate healthy cash flows are in a difficult position,” said Vince Tolve, vice president, SunGard’s global trading business. “Many treasury departments are refining their credit policies and investing in risk management skills to deal with counterparty risk, as well as systems and processes to improve cash flow forecasting.

“New regulations will create new investment challenges and instruments for corporate treasurers. These clients are preparing for this transition while exploring investment opportunities outside their home markets. Integrated treasury platforms and multi-asset electronic dealing portals will become essential as decision-making and execution develop regionally.

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