CFOs holding on to cash reserves

Almost a third (31 per cent) of UK CFOs are retaining higher cash reserves, rather than reinvesting revenue back into the business or returning monies to investors, according to new research.

The research, which was carried out by Robert Half Management Resources, specialists in interim accounting and finance recruitment, reveals that a lack of available credit by banks is causing CFOs to re-evaluate their company’s balance sheets and how they manage profits.

A quarter (26 per cent) of those surveyed cited difficulty in securing finance and credit as the main reason for not returning profits to investors or reinvesting in the business.

Surprisingly, it is large UK companies that appear to be suffering most from the credit squeeze, with more than a third (35 per cent) citing difficulty securing finance and credit as the primary reason for keeping more cash in reserve.

However, 16 per cent of CFOs admitted that they are stockpiling cash in a bid to facilitate the future expansion of their business. Mergers and acquisitions are still on the agenda for a number of CFOs, with eight per cent of all surveyed planning to use profits to expand this way, while 15 per cent of CFOs from large organisations are planning M&A activity with these revenues.