Many companies beefed up their cash and short-term investment balances in 2021’s opening quarter, but not all of them.

In fact, 34% of organizations cut their cash holdings, compared with the 40% who increased them. The +6 percentage point difference is what the Association for Financial Professionals (AFP) calls its Corporate Cash Indicators index. (The percentage of companies with higher cash holdings at quarter’s end minus the percentage with lower cash holdings.) That index was down 33 points from the fourth quarter of 2020 (when 56% of firms added to their cash balances and 17% reduced them) and down 18 points from a year earlier.

A reading of as low as 6 is definitely unusual for the AFP Corporate Cash Indicators index. The first quarter’s reading is the lowest since April 2019. The 34% of organizations that said they had lower cash balances on March 31, 2021, is the highest in the index’s history, which goes back to January 2011.

While cash reductions may mean some companies are deploying it to invest in growth, some survey respondents told the AFP that cash holdings “were primarily due to poor business performance, which forced them to draw down cash reserves.”

Compared with a year ago, about 22% of organizations said they had smaller cash balances versus 43% that had larger cash balances.

The AFP said some organizations are still looking to preserve cash against any upcoming economic uncertainty and are thus increasing cash and cash equivalents. But Federal funding assistance has also boosted some firms’ cash balances.

The AFP cash indicators index is slightly skewed toward small to midsize firms — in the April edition, about 39% of the respondents hailed from companies of $99.9 million in revenue or less. But 29% of respondents had $1 billion or more in revenue.

Using S&P Capital IQ, CFO found that of 887 U.S. publicly held firms with between $10 million and $100 million in annual revenue (excluding financial services), 44% had lower cash balances at the end of March 2021 than they did at the end of 2020. So the fact that companies’ cash buffers are going in opposite directions is not a function of AFP’s sample.

The AFP also uses a forward-looking metric, which asks finance executives whether they think cash and short-term investments will increase, decrease, or maintain their levels in the current quarter.

The finance executives’ projections for the second quarter could be viewed positively or negatively. The AFP indicators show that 30% of organizations expect to add to cash and short‐term investment balances by the end of June, while 29% expect their balances will be reduced. In January 2021, only 15% of finance executives projected higher cash balances at the end of the quarter.

A more pessimistic interpretation is that more companies want to get their cash buffers back up to pre-pandemic levels.

More companies building up their cash holdings could be a sign of stronger financial performance. Indeed, in 2020, finance executives continually projected a decline in cash balances in the next quarter — as many as 40% did so at the end of March 2020.

A more pessimistic interpretation is that more companies want to get their cash buffers back to higher, pre-pandemic levels.

A strange phenomenon of the AFP cash indicators survey is that finance executives often anticipate they’ll be drawing on cash reserves in the current quarter but then wind up with higher cash balances when the quarter finishes. This quarter, they project cash balances will increase. Many would prefer to see that as a sign of optimism (and that more cash will be flowing onto companies’ balance sheets) than an indicator that companies are still uncertain about the post-pandemic economy.

Said the AFP: “After an extremely tumultuous year where we witnessed significant loss of life due to the pandemic, record  unemployment, some businesses having to close their shutters permanently, and organizations grappling with liquidity challenges to remain viable, it is reassuring to see signs of  recovery and cautious optimism among treasury and finance professionals.”

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