CFO Confidence Masks a Cash-Access Divide

The latest Federal Reserve–Duke CFO Survey looks reassuring at first glance. CFO optimism about the U.S. economy held at 60.3 out of 100, expectations for year-ahead contraction eased, and most firms said financing had not constrained their plans.

But the average obscures the operating lesson. The survey found weaker confidence among smaller and financially constrained firms, while access to cash separated companies able to keep investing from those that could not pursue new opportunities. That is not merely a credit-market story. It is a reminder that liquidity is part of operating capacity.

The judgment

• Implication: Stable aggregate confidence should not be mistaken for equal financial flexibility. Cash on hand is preserving strategic choice for many firms even when borrowing costs are high.
• What would change the conclusion: The divide would matter less if smaller-firm constraints narrowed, planned investment recovered and demand remained firm without further margin pressure. A broad rise in financing constraints or a material weakening in demand would make the risk more urgent.
• Management action: Separate the forecast by liquidity and funding access, quantify opportunities deferred for lack of cash, and show the board which planned investments remain executable under downside scenarios.

The reported facts

The survey was fielded from August 17 through September 4, 2026. Depending on the question, 463 to 506 U.S. firms responded. Revenue, price and unit-cost estimates were weighted by sales; employment and wage estimates were weighted by employment. The Richmond Fed also reported that the results were winsorized to limit the effect of extreme responses.

Four findings matter for finance leaders:

1. Most firms were not financially constrained. Nineteen percent said the cost of or access to financing had constrained investment or spending. That was below the nearly 30 percent reported when the question was last asked in the second quarter of 2023.
2. The cost of constraint was strategic. Among constrained firms, more than 60 percent said financing prevented them from pursuing new business opportunities. The reported effect was less often an inability to cover operating costs, repay debt or replace assets.
3. Cash created insulation. Among firms that were not constrained, nearly half cited sufficient cash as a reason they were less exposed to external financing conditions.
4. The burden was uneven. The share of smaller firms—those with fewer than 500 employees—reporting financial constraints was roughly double the share among larger firms. The Richmond Fed described the effect as contained, because about four in five smaller firms still did not report a constraint.

At the same time, 55 percent of firms expected demand to increase over the next 12 months, and 51.1 percent had increased non-capital spending during the prior three months. Yet plans to invest in equipment and structures declined from the first quarter. Of firms planning no investment, just over a quarter said they were preserving cash.

Analysis: cash is buying option value

The following is Numbers & Judgment analysis, not a reported conclusion from the survey.

A balance sheet can look conservative and still be productive. In this survey, cash appears to be doing more than protecting firms from distress. It is preserving the ability to hire, spend and act on opportunities without testing an expensive or uncertain credit market.

That option value is easy to miss in a standard monthly package. Cash is usually shown as a point-in-time balance, while debt is shown as a schedule. Neither display answers the operational question: which decisions remain available if receipts slip, costs rise or a time-sensitive opportunity appears?

Finance teams can make that trade-off visible by showing three layers of liquidity:

• Committed liquidity: cash required for payroll, taxes, debt service and unavoidable vendor obligations.
• Protective liquidity: the reserve needed to absorb plausible timing and forecast errors.
• Strategic liquidity: cash that can fund an approved opportunity without putting core operations at risk.

The categories are management constructs, not accounting classifications. Their value is that they force leadership to say which cash is genuinely available—and what the organization would give up by using it.

Nominal growth can overstate operating strength

CFOs raised their expected 2026 revenue growth to 7.7 percent from 6.5 percent in the prior-quarter survey. They also raised expected price growth to 5.3 percent and unit-cost growth to 4.8 percent. Those figures do not translate directly into real volume or margin growth, but together they warn against reading the revenue line in isolation.

A finance team should bridge expected revenue growth into price, volume, mix and acquisitions, then reconcile that bridge to unit costs and cash conversion. If higher sales are largely price-led while receivables, inventory or wage commitments absorb more cash, headline growth may coexist with reduced financial flexibility.

That is why the first page of a board package should connect earnings, cash and decisions. A companion Numbers & Judgment piece identifies five figures worth putting on that first page. The new survey adds a sixth question: how much of the opportunity pipeline is actually funded?

A better board view of financial constraint

“Are we financially constrained?” is too blunt. A more useful board discussion separates four conditions:

1. No constraint: priority operations and investments are funded with adequate contingency.
2. Opportunity constraint: operations are secure, but attractive projects are deferred because financing would be too costly or uncertain.
3. Resilience constraint: planned activity can proceed only by consuming the reserve needed for a plausible downside.
4. Operating constraint: liquidity pressure threatens payroll, vendors, debt service or other core commitments.

The survey suggests that today’s aggregate U.S. picture is closer to the first two categories than the last two. But averages cannot determine where an individual company or nonprofit sits. That requires a rolling cash forecast, explicit downside assumptions and a list of decisions management will take if the downside appears.

The same discipline sits behind the recent analysis of why liquidity capacity must be operationally tested. Access in theory is weaker than access that has been documented, approved and rehearsed.

What management should do now

• Build a 13-week cash view alongside the annual forecast, with timing assumptions owned by operating leaders.
• Tag each capital request as maintenance, capacity, compliance or strategic growth, then show which categories disappear under each liquidity scenario.
• Track the value of deferred opportunities, not only cost reductions. A company can protect this quarter’s cash while quietly shrinking next year’s options.
• Report available borrowing capacity only after covenants, collateral, approval steps and draw timing are tested.
• For nonprofits, separate unrestricted operating cash from restricted balances and board-designated reserves before drawing conclusions about flexibility.

The free 13-Week Cash Flow Forecast Template can provide the starting structure. The judgment remains management’s: deciding how much liquidity protects the mission and how much preserves the ability to move.

Bottom line

The Q3 CFO Survey does not describe a broadly credit-starved economy. It describes something more selective: firms with cash and scale are absorbing high financing costs, while a smaller group is losing opportunities at the margin. For CFOs and boards, the message is not to maximize cash indiscriminately. It is to know which choices the current liquidity position can fund—and which choices disappear first when the forecast moves against you.

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Sources

• Federal Reserve Bank of Richmond, Duke University and Federal Reserve Bank of Atlanta, “CFO Outlook: Steady Overall but Weaker for Small and Financially Constrained Firms,” September 23, 2026.
• Zach Edwards and Daniel Weitz, Federal Reserve Bank of Richmond, “Are Firms Financially Constrained?” September 23, 2026.