Business-to-business bad debts double

Wednesday 10th June 2009

The number of business-to-business debts referred to collection agencies in New Zealand doubled in the first quarter from a year earlier, a sign that the prolonged economic slump is eroding firms’ cash flow, according to Dun & Bradstreet.

The number of debts referred has soared 127% from the first quarter of 2008, D&B said in a statement. The biggest jump was in Auckland, where the increase was 160%, D&B found.

“Cash flow issues are prevalent in the economy” and the downturn “is likely to be prolonged and difficult for many firms,” general manager John Scott said. “Cash flow and receivable management have come to the fore as executives have realized the critical role they play in ensuring the sustainability of business.”

According to D&B’s trade payments analysis, businesses in Auckland were the slowest to pay in the first quarter, averaging 51.3 days to settle accounts, while those in Wellington and Christchurch averaged 49.9 days and 48.5 days respectively.

The amounts being chased by Auckland firms was also the highest nationally, averaging $2,300, up 32% from a year earlier.

D&B said some 44,000 New Zealand firms are more likely to pay their trade accounts late, with business-to-business payment days almost three weeks longer than the standard 48.4 days.

Businesswire.co.nz

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