NZ firms' time to pay falls to 10 year low, D&B says

Tuesday 16th October 2012

New Zealand's business-to-business payment times fell to a 10-year low in the September quarter, says credit checking agency Dun & Bradstreet.

The Christchurch-based agency's Trade Payments Analysis survey founded that the average payment time fell two days to 40.3 in the September quarter. That's significantly lower than the 50.8 days recorded at the height of the global financial crisis.

Australia, New Zealand's largest trading partner, recorded a payment time of 52.5 days.

"This trend has been evident over a number of quarters now, and suggests that firms are better understanding and managing their cash flow," New Zealand general manager, John Scott said in a statement. "This trend has a flow-on effect on the broader economy, as businesses continue to experience more positive financial conditions and as a result, less of a strain on their cash flow cycles."

The reduction in payment times, which has been trending downwards since 2008, aligns with recent Reserve Bank data which indicated the economy grew at 2.4 percent in the year to September. The central bank predicts that grow is likely to continue into 2013.

Businesses with six to 19 employees were the fastest bill payers down three days, to the lowest level in three years, on 39.4 days compared to the time a year earlier.

"Trade credit accounts for a significant portion of short-term finance for firms and consequently, is one of the most important identifiers of individual business health as well as overall economic health," Scott said. "This is particularly true for small businesses as they often rely more on trade credit rather than bank credit."

Firms with 20 to 49 employees dropped three days to 39.6 days.

The slowest payers were businesses with more than 500 staff cutting their payment times by five days to 42.4 days.

Communications was the slowest paying industry on 43.7 days, followed by electricity and gas and sanitary services on 41.8 days.

BusinessDesk.co.nz

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