Debt collectors Dun & Bradstreet (D&B) said that the number of business-to-business debts referred for collection in New Zealand rose 127% in the March quarter from the same quarter a year ago and that the average value of debts had also risen. In the main centres, there was a 160% increase in the amount of debts referred by Auckland businesses from March 2008. Auckland businesses were also the slowest to pay during the March quarter, taking an average 51.3 days to settle accounts, D&B General Manager John Scott said. Wellington businesses made a 139% increase in referrals, and it averaged 49.9 days for Wellington businesses to settle accounts. In Christchurch, referrals rose 134%, and the amount of time to pay by businesses there was 48.5 days. "A number of New Zealand firms are now acting on their arrears relatively quickly when previously they would have allowed them to accumulate for lengthy periods of time. These executives are seeking to address both current outstanding payments and longer term arrears, which is increasing the level of debt being referred for collection," Scott said. "With the vast majority of business failures said to be the result of poor cash flow management, this is a smart move which could be the difference between a business continuing to operate profitably or falling into irreversible financial distress," he said. "Delaying bill payments for as long as possible is a tactic that some businesses use to manage their cash flow however it can lead to an outstanding debt spiral that drags more and more firms into the late payment cycle." D&B said that further research revealed that almost 44,000 firms were more likely to pay their trade accounts in a delinquent manner.
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