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Cash Is Still King: Finance Executives At Mid-Size Companies Focus On Maintaining Fiscal Discipline

Four years after the economic downturn, finance executives at mid-market companies are still focused on maintaining financial discipline and ensuring they have sufficient cash on hand. Executives acknowledge, however, that maintaining that level of discipline will be difficult as growth picks up, and cash is required for urgent spending and investment needs.

These are among the findings from a new American Express/CFO Research report on mid-size companies, “Cash and Working-Capital Discipline: CFOs at midsize firms face their top financial challenges,” that is being released at this week’s 19 th annual CFO Leadership Summit. The report surveyed 323 senior finance executives at mid-size companies in the United States.

“Balancing working capital performance with competing spending needs and growth opportunities is a key challenge companies of all sizes face today,” said Darryl Brown, President, Americas, Global Corporate Payments, American Express. “Mid-size companies have additional challenges, as they frequently negotiate for better payment terms with companies larger than they are, putting them at an obvious disadvantage. These companies need to be even smarter and more disciplined when it comes to cash flow management, and find new ways to maximize their working capital.”

Strategies for Surviving Recession Create Foundation for Growth

The vast majority (85%) of finance executives at mid-size companies are more financially disciplined in the aftermath of the recent downturn.
  • While over one-third of all respondents (34%) say that maintaining financial discipline will become easier in the coming year, more respondents (41%) say they expect it will become more difficult as financial and personnel resources are allocated to meet new growth prospects.

At the same time, finance executives recognize the value of maintaining fiscal discipline.
  • Sixty-nine percent of respondents say that financial discipline will contribute to their competitive advantage over the next year – in contrast with 18% that cited this would limit their company’s competitive advantage.

Challenges Threaten Working Capital Improvement

According to the survey, mid-market companies have stronger working-capital positions today than they had when the recession took hold. Two-thirds of respondents reported that their companies’ days-working-capital (DWC) position today is better than it was three years ago.

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