NZ businesses get quicker at paying bills but still make creditors wait

Wednesday 16th November 2011

New Zealand businesses are paying their bills at near the fastest pace since the global financial crisis though most are still making creditors wait an least an extra two weeks, according to a new survey.

Kiwi firms took an average of 44 days to settle their accounts in the third quarter, down from 45.8 days three months earlier, according to an analysis of trade payments by Dun & Bradstreet New Zealand. That’s down from 50.8 days in the fourth quarter of 2008 and is the second-fastest since the fourth quarter of 2007.

The credit information company attributed the increase to improved business confidence and activity, driven by key events such as the Rugby World Cup. The survey found 55 percent of firms took longer than 30 days to pay their bills.

Private firms with 9–to-16 employees were the fastest to settle, at an average of 42 days. Large firms with more than 500 employees were the slowest paying group at 47 days.

The standard repayment period is meant to be 30 days but payment terms have never dipped below 40 days in New Zealand, said John Scott, Dun & Bradstreet’s country manager.

"This paints a worrying picture for cashflow management, which will worsen if firms do not focus on the fundamentals like risk assessment and receivables management," he said. The fastest paying sector was forestry at 39 days while the slowest payers were in communications, gas and electric services, at 50 days.

Wellington topped Christchurch as the fastest paying city at 45 days versus 46 days.

Scott said South Island businesses were traditionally the fastest bill payers but following the Christchurch earthquakes firms took three days longer to pay back their bills than in the same period last year. That’s a clear sign companies have not yet recovered, he said.

(BusinessDesk)

BusinessDesk.co.nz

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