Thanks to 2013 being a strong year for more companies, a lot of them have managed to build up their levels of cash according to a survey by Capita Asset Services and Financial Director.
The report found that more than half of businesses saw their net cash holdings rise, with an average increase of 11% compared to the previous financial year. It also found that only 17% of those surveyed reporting a decrease in their holdings.
The increases have been supported by rising sales and profit, while 20% said that their working capital position had also helped. Companies reported an average holding of £19.8m in cash and equivalents.
Justin Damer, the commercial director of Capita Asset Services said: “Firms took drastic action to build cash reserves to insulate themselves enough to survive the recession, and are now taking advantage of rising sales and profits to strengthen balance sheets further and pay down debt.”
There is also a high level of confidence about the future too. 68% of those surveyed expected better sales this year, while 47% thought this would lead to greater cash levels too. Just under a third are also concentrating on paying off long term debts at the expense of sharing capital with their shareholders.
Damer also added: “Increasing confidence bodes well, and it’s very encouraging to see higher capital expenditure planned by so many firms, but it’s clear that liquidity remains central to corporate finances.”