LATE PAYMENTS RISE FOR SECOND CONSECUTIVE QUARTER
Dun & Bradstreet’s quarterly report suggests the economy is in sound shape for now despite what it calls 'surprisingly moderate' growth
Late payment times edged higher in the June quarter, say Dun & Bradstreet, although the level of late payments remains near historical lows. The company’s Late Payments report analyses trade information from Dun & Bradstreet’s Commercial Bureau, the largest database of business-to-business payment information in Australia and New Zealand.
The report suggests that while it is too early to be concerned about the rise in late payments over the past two quarters, any further increases will indicate a shift away from the recent pattern of falling payment times.
‘The New Zealand economy has recorded surprisingly moderate growth so far in 2017,’ says Stephen Koukoulas, Dun & Bradstreet Economic Advisor. ‘With the RBNZ also leaving official interest rates on hold with for an extended period, the factors that drove late payments lower between 2011 and 2016 – strong growth and progressively lower interest rates – have been absent. Despite that, the late payments data confirm the economy is in sound shape with a healthy corporate sector, despite the moderate rate of economic growth.’
Mr Koukoulas points out that 79.5 percent of firms pay their bills promptly. ‘A further 15 percent of firms pay their bills within 1 to 30 days, reflecting the strong cash flow position of most businesses. While just 2.7 percent of bills take more than 60 days to pay, these are the bills that run the risk of damaging the finances of the creditor companies and if this rises it would pose some threat to overall economic conditions.’
One trend remains sadly familiar: the largest companies (those with more than 500 employees) are the slowest to pay their accounts. ‘The moderate lift in late payment times in the last few quarters has been across firms of all sizes. Prior to the more general rise in late payments, larger companies started to extend their payment times. This trend has continued in recent quarters and smaller firms continue to have the lowest rate of late payments.’
The regional breakdown reveals that Auckland businesses have the latest average payment times. This is due to the fact that many larger firms are headquartered in Auckland. The lower late payments times are linked to other regions, including those skewed towards agriculture and related industries, which historically have the lowest late payment times.
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