An extra 4% of businesses failed to pay their trade accounts on time in the December quarter, data from credit information provider Dun and Bradstreet shows.
New Zealand firms also took an average 43.9 days to settle their trade accounts during the December quarter, which was two weeks above the standard 30 day payment term.
Large businesses, particularly those in the utilities and communications sectors, were the slowest payers of bills. Small businesses actually improved their payment times during the December quarter.
Dun & Bradstreet’s New Zealand General Manager John Scott said the latest business-to-business trade payment figures indicated that cash flow would remain under pressure during 2011.
“Dun & Bradstreet’s latest research shows that an increasing number of New Zealand firms are delaying their bill payments,” Scott said.
“A four percent increase in the number of entities paying their accounts late has 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.
“In addition, the time businesses are taking to pay each other has also increased, which means firms are 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.”
Nine of the fourteen sectors examined experienced a deterioration in their payment times compared to the previous quarter, while ten allowed payments to slow compared to the December quarter 2009.
The biggest deterioration in payment times came from the communications sector, which added 2.3 days quarter-on-quarter and 4.7 days year-on-year to the time it takes to settle its accounts.
However, this sector was not the slowest paying group.
Communications firms averaged 50.4 days to settle their accounts during the December quarter but the electric, gas and sanitary services industry took 51.2 days to pay its bills following an increase of 2.0 days since the previous quarter.
The quickest paying group was the agriculture sector, which took 39.9 days to pay, making it the only industry that took less than 40 days to settle its accounts.
The mining sector was the second quickest to pay despite having allowed terms to increase compared to the September quarter 2010 and the December quarter 2009. Businesses in this industry averaged 41.5 days to pay their accounts.
The fishing industry – one of the sectors that improved its payment times – took 4.0 days off the time taken to settle its accounts, making it the most improved group.
The transportation sector took 2.7 days off quarter-on-quarter, while all other improvements were marginal.
Biggest are the worst
Larger firms with more than 200 employees were consistently slower payers than smaller businesses, with the biggest of these big businesses being the slowest.
This group also recorded the most significant increase in payment terms quarter-on- quarter.
A small improvement in payment times from businesses with 6-19 employees resulted in this group being the quickest to pay during the December quarter.
5 Comments
Being a retailer of home of home appliances is not much fun at present. One of my mates is in there huge time and no one is paying him and he has never been so late in paying his bills as a result. It has to get better otherwise just more unemployment which is not great for the economy. He would have to be operating at a loss so far this year so no tax for the IRD. That also is not good for the economy.
yep, my 3 biggest customers pay on the 30th/31st of each month, I don't mind too much as I know it will come. However, Two of these paid in early Dec/Jan this year so the OD got some use to pay the bills. May have just been the way the holidays fell - but definitely noticeable.
We do not have this problem at present , and we are pretty much up to date with our debtors book , but in August last year a certain large printer with a nationwide profile ( who for obvious reasons cannot be named ) openly told us they did not have the funds to pay a $2000 Invoice . It was quite bizarre
It took another three months of drip - feeding to get paid .
I would suggest that anyone who finds that their debtors are not paying or or 30 days or more OVER TERMS OF TRADE , should immediately withhold supply until its brought into line.
Business is business and we all need to eat , pay wages, rent , interest , taxes , etc .
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