NZ businesses taking longer to pay bills

Tuesday 24th May 2011

New Zealand businesses, struggling against a grim economy and natural disasters, are taking longer to pay their bills.

Business to business payment terms deteriorated by two days in the March quarter to reach an average of almost 46 days and a twelve month average of 44.5 days, according to the latest Dun & Bradstreet's Trade Payments Analysis, released today.

The figure compares to a peak of 51.9 days in 2001 and it fell as low as 40.9 days in 2004.

Dun & Bradstreet New Zealand general manager John Scott said these figures show a country battling to emerge not only from the global financial crisis but from a spate of natural disasters.

All New Zealand industries bar forestry and the electric, gas and sanitary services sector experienced some deterioration of payment terms in the year to March, when no industry managed to maintain an average trade payment rate of less than 39 days, well over the standard 30 day invoicing period.

Christchurch was the worst performer of the country's three primary business districts, extending the average length of account payments by three days, to peak at 47 days, compared to a twelve month low of 42 days just six months earlier.

Public administration at 51.1 days, communications at 49.7, electric, gas and sanitary services sector at 48.7, manufacturing at 48.4 and construction at 48.3 were the sectors taking the longest to pay outstanding accounts in the March quarter.

The country's best payers for the quarter were: mining at 41 days, forestry at 41.6 days, agriculture at 42.6, finance, insurance and real estate at 43.3 and transportation at 43.5 days.

Scott said the longer a sector takes to pay its accounts the more likely it is that sector is experiencing difficulties in a broader sense.

"No business will survive in the long term without strong cash flows, no matter how solid the revenue. This is an element of business many industries are clearly neglecting, usually at their own peril."

Both public and private sectors grew payment terms during the March quarter, however public companies more so than private with an average of 47.3 and 45.9 days respectively.

While the data indicates a growing trend of tardiness towards trade accounts, overall only five per cent of New Zealand businesses paid accounts between 31-60 days late and the figure for those 60 days or more overdue was fractional.

The figures worsened but we are still quicker at paying than our Australian neighbours, where the level of severely overdue trade accounts has risen by 20%. The average Australian account takes almost two months to be paid.

NZPA

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