Senior finance managers are more optimistic about the economythan they've been in five years, according to the “2013 CFOOutlook: Mid-Year Update” from Bank of America Merrill Lynch.Granite Research Consulting surveyed 250 CFOs, finance directors,and other executives from businesses of all sizes locatedthroughout the United States. Fifty-eight percent of them arefeeling positive about the domestic economy­. That's a jump ofalmost 10 percentage points from the 49 percent who felt positiveat the beginning of 2013, and it's the survey's highest proportionof optimistic CFOs since 2008.

A clear majority of respondents (55 percent) expect the economyto expand later this year, and only 10 percent expect it tocontract. That's a big change from six months ago, when 39 percentpredicted an expansion and 24 percent expected a contraction.

Respondents are also fairly optimistic when asked about theprospects for their own companies. A majority (56 percent) expecttheir organization's revenues to increase, and 43 percent expecttheir profits to increase as well. (See Figure 1.) Almost half (48percent) expect their company to hire more employees within thenext year, up a bit from 45 percent six months ago, but theproportion who anticipate layoffs is also up slightly—10 percenttoday vs. 8 percent at the beginning of 2013.

When asked to pinpoint their most significant financialconcerns, CFOs' number-one choice was healthcare costs. Second wasrevenue growth, mirroring the results of another recent survey of CFOs, in which a majority of respondents saidconcerns about revenue growth keep them up at night. And althoughmany companies are flush with cash right now, 36 percent ofrespondents to the Bank of America Merrill Lynch survey cited cashflow as a serious concern. (See Figure 2.)

More than three-quarters of companies represented in the surveydo business internationally. Sixty-six percent buy from foreignmarkets (up from 61 percent a year ago). Fifty-nine percent sell toforeign markets (up from 42 percent a year ago). And 32 percenthave operations in foreign countries, up from 21 percent a yearago. Among the organizations that have operations in othercountries, 84 percent do business in Canada and/or Mexico; 72percent do business in the Asia/Pacific (APAC) region; 66 percenthave facilities in Europe, the Middle East, and/or Africa (EMEA);and 25 percent have operations in Latin America.

Many of these businesses expect to expand abroad: 37 percent inthe APAC region, 27 percent in Canada or Mexico, 15 percent in theEMEA region, and 9 percent in Latin America. As they do so, theywill be keeping an eye on several notable challenges, includingmanaging risk, navigating new cultures, managing liquidity, and accessingcapital. (See Figure 3.)