CFOs to Boost Capital Spending in 2016

But certain elements of the cash-flow cycle are causing them problems, according to TD Bank.
Katie Kuehner-HebertNovember 18, 2015

Chief financial officers in the are planning to significantly boost capital spending in 2016, despite probable interest rate increases and the uncertainty of an election year, according to TD Bank’s fifth annual CFO Survey, released Monday.

A majority (61%) of 300 U.S. CFOs and other corporate financial decision makers at middle-market and large corporations surveyed by the bank expect to increase capital expenditures next year, particularly in three keys areas: technology (58%), existing facilities (44%), and data security (41%).

This is despite speculation that the Federal Reserve may soon raise interest rates for the first time in more than a decade. Indeed, nearly three-quarters (74%) of executives said the rate increase would have no impact on their borrowing.

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“Rising interest rates may create headline noise which impacts the stock market, but executives are prepared for an eventual rate increase and are moving forward with investments in their infrastructure, facilities, and people,” TD Bank’s head of corporate and specialty banking Greg Braca said in a press release. “It’s clear that businesses have adjusted to the ‘new normal’ and are focused on growing within that environment.”

While 69% of CFOs are optimistic with regard to their business outlook for the year ahead, they expressed some concerns with both day-to-day operations and long-term performance. Specifically, they noted the following distresses in the cash-flow cycle: timeliness in collecting payments (29%); outdated systems creating inefficiencies in operations (21%); and manual processes associated with payment initiation (17%).

Government policy continues to be a chief concern for executives as well, though the importance of economic issues has shifted, according to the survey.

Health-care reform and government efficiency rank as the top priorities for executives, who said they would like 2016 presidential candidates to address those issues in their campaigns. In previous years, the survey found job creation, federal regulation, and monetary policy were among the leading political concerns.