Several recent surveys of CFOs and credit managers paint a picture of cautious optimism when it comes to the U.S. economy.
The March Credit Managers' Index, a survey of about 900 credit managers produced by the National Association of Credit Management (NACM), stood at 56.2. While that falls short of the numbers seen during the boom years, when the Index routinely hit the mid-60s, this was the highest level achieved during the past year. The current number "is yet more reinforcement for the notion that the economy is doing better and that the recovery may be real," the NACM reports.
Behind the upward trend in the Credit Managers' Index were improvements in several unfavorable factors, including accounts placed for collection and disputes and dollar amount of customer deductions. The movement in these factors reflects a drop in the number of bankruptcies, NACM notes. Indeed, the number of business bankruptcy filings has declined for the past two years, according to the American Bankruptcy Institute. It fell from 60,837 in 2009 to 56,282 in 2010, and then to 47,806 in 2011 -- a drop of more than 27 percent in two years. The NACM notes that "most of the weakest companies have gone by the wayside."
Credit managers aren't the only finance professionals observing at least a bit of improvement in the economy. The latest CFO Signals survey by Deloitte shows rising optimism among chief financial officers. Admittedly, this comes after two quarters of sharp drops in CFOs' optimism. Still, the numbers are heading in the right direction.
For instance, more than three-fifths of the approximately 100 CFOs in the survey reported a more positive view of the economy, while only 15 percent said they are less positive. The figure the survey defines as "net optimism," or the difference between those feeling optimistic and those pessimistic about their companies' prospects, jumped to 48 percent, after being in negative territory for the last half of 2011.
That's not to say anyone is resting easy. Among the issues keeping the CFOs in the survey awake at night are the state of the global economy, in particular the Eurozone, along with rising tensions in the Middle East, which prompt concerns about higher fuel prices. The company-specific issue capturing CFOs' attention is revenue growth from existing markets, which was mentioned by 60 percent of respondents. While the CFOs surveyed forecast a rise in sales, their expectation of a 5.9 percent jump is a new low, according to the report. Earnings, however, are forecast to jump 12.8 percent.
CFOs' plans for their firms' cash balances seem to reflect the current mood of cautious optimism. About 27 percent plan to invest domestically, while nearly one-fourth will use their balances to maintain liquidity. Fourteen percent are allocating funds to dividend payments, while 13 percent will pay down debt.
Another survey -- this one by the AICPA, and reflecting the input of about 1,400 CPAs working in the corporate world -- reinforces the theme of cautious optimism. More of the CPAs surveyed during the first quarter of 2012 expected to see growth in revenue, profit and headcount than those surveyed during the fourth quarter of 2011. And, about 14 percent of respondents said their firms had more cash than they needed, up from 11 percent a year ago. Overall, the CPA Outlook Index rose from 64 in the fourth quarter of 2011 to 69 during the first quarter of 2012.
Still, survey respondents aren't quite as sanguine about the U.S. economy as they were just a year ago, when nearly half -- 48 percent -- said they were optimistic. That number since has slid to 43 percent. Among the issues on CPAs' minds are the political environment in Washington, regulations and unemployment. And, while 55 percent expressed optimism about their own firms' prospects, that's a slight drop from the 57 percent figure of a year ago.