In our “2020 Cash Management Survey,” conducted this autumn, Treasury & Risk asked readers where their company holds cash and short-term investments. Survey respondents were mostly treasury professionals (51 percent) or finance managers (36 percent), and a majority hailed from companies with more than $1 billion in revenue.
Overall, the survey results are not terribly surprising. More than a quarter of respondents (26 percent) hold all their cash and short-term investments in bank deposits, including CDs and time deposits. Another 26 percent hold at least half their cash in bank deposits. What is a bit surprising about this data is that the proportion of companies with at least half their cash in bank vehicles is down 21 percent compared with 2019—and 18 percent of respondents said their company holds no cash at all in bank deposits.
Treasury bills experienced a similar decline in popularity, with the proportion of companies that hold no T-bills at all rising from 72 percent in 2019 to 84 percent this year, and the proportion of companies storing some, but less than half, their cash in T-bills falling from 26 percent in 2019 to 13 percent now.
Prime money funds also saw a significant decline. In 2019, they accounted for at least some corporate cash among 42 percent of respondents; in our 2020 survey, that number has fallen to 27 percent. This tracks with the fact that 11 percent of 2020 respondents have altered their investment policy in the recent past to eliminate prime money funds as a cash investment option.
Where, then, are companies stashing their cash? Government money funds are more popular this year, with the proportion of respondents storing at least half their cash in government funds rising from 7 percent to 12 percent. Ultra-short bond funds experienced a small gain, as the proportion of survey respondents investing in this vehicle grew from 8 percent to 11 percent.
The biggest changes, though, were in separately managed accounts, which 15 percent of respondents use—with 4 percent holding all their cash in separately managed accounts—and Eurodollar deposits, which were not included in the 2019 survey but are utilized by 11 percent of 2020 respondents.
It’s also noteworthy that survey respondents have spent the past year repatriating funds. Although 8 percent still hold more than three-quarters of their cash abroad, and 18 percent of companies operating in more than nine countries do so, 41 percent of respondents’ organizations have no cash overseas, and that is even true for 5 percent of companies operating in more than nine countries.