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Fewer NZ business insolvencies, Australian failures rising

Wednesday 12th October 2011

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Credit checking agency Dun & Bradstreet says New Zealand is now experiencing one of the lowest rates of business insolvency among developed countries it monitors, but that a surge in Australian failures means kiwi firms can’t be complacent.

Releasing the results of the latest D&B Global Insolvency Index, the agency’s local general manager John Scott said strong commodity prices and low interest rates appeared to be key reasons for the number of insolvencies in the September quarter falling by 20% compared to June 2010.

Only Latvia ranked better for insolvency rate improvements than New Zealand, among the countries D&B monitors, with a 50 point advantage over Australia, 25 points better than Britain, and 18 index points ahead of the U.S.

Some 670 business failures were reported in New Zealand in the September quarter, compared with 850 in the same quarter last year.

However, the rapid decline in business conditions in Australia was cause for concern.

“Australia now sits on a par with indebted Eurozone countries such as Italy, Spain and Hungary, despite having a booming mining sector,” said Scott. There had been almost 1,000 Australian business failures in July alone.

“Given that Australia is our largest two-way trading partner and accounts for $17.7 billion in total trade, it is crucial that kiwi businesses do not take our lowered insolvency figures for granted.”

The index result also suggests that many businesses continue to face cash flow constraints, with the average time to pay invoices at 46 days, two days longer than a year ago.

BusinessDesk.co.nz



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