More firms delay paying bills

Tuesday 25th January 2011

Dun & Bradstreet is reporting an increasing number of firms delaying bill payments, saying its latest business-to-business trade payment figures indicate cash flow will remain under pressure in 2011.

New Zealand firms took an average 43.9 days to settle trade accounts during the December quarter, up from 43.5 a year earlier, and two weeks above the standard 30-day payment term, the credit information and debt management services company said.

An examination of millions of accounts receivable records on its database showed that four percent more firms failed to pay their trade credit accounts during the December quarter, compared to a year earlier.

Dun & Bradstreet New Zealand general manager John Scott said a 4% rise in the number of entities paying accounts late had the potential to inflict cash flow difficulties on a large number of firms.

"This is a worrying trend as it can draw more and more businesses into the late payment cycle, making it increasingly difficult for firms to escape the pressures associated with slow paying customers," Scott said.

The increase in the time businesses were taking to pay each other, meant firms were being denied access to their cash for longer.

"For small firms in particular, this type of delay in receiving payment for products or services could push a business into severe financial stress," Scott said.

NZPA

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