The payment terms of New Zealand firms have reached a plateau with little improvement in the latest quarter.Dun&Bradstreet's (D&B) latest trade payment analysis, which examines millions of accounts receivable records, shows that in the December 20
The payment terms of New Zealand firms have reached a plateau with little improvement in the latest quarter.
Dun&Bradstreet's (D&B) latest trade payment analysis, which examines millions of accounts receivable records, shows that in the December 2009 quarter, business-to-business payments rose to 44.6 days -- an increase of 0.3 days on the previous quarter.
Though payment terms have improved since the height of the recession, the analysis shows it remains two weeks above the 30-day term standard.
D&B expects improvements in the coming months as over the past three years, payment terms have improved by an average of 2.1 days from March to June quarters. An improvement would take terms to 42.5 days, the fastest terms recorded since the September quarter of 2007.
D&B New Zealand general manager John Scott said although payments have stalled, 2010 looks like a promising year for New Zealand firms.
"If economy growth progresses as expected we should see further improvements in payment terms," he said.
"Payment terms are a strong indicator of firm's cash position so the recent improvements are a positive sign that liquidity is improving. However, there is still some distance to go before we return to the level of business strength that existed prior to the crisis."
Mr Scott said New Zealand executives need to ensure they have a strong cash position by taking prompt action to collect their bills.
"If they take their eye off the ball and allow their vigilant focus to waver, the economic recovery will falter."
The agriculture sector maintains its position as the fastest paying sector since the September quarter of 2008, with payment terms at 40.1 days in the December quarter.
The fishing and manufacturing sectors also showed improvement by more than a week, down 8.2 and 7 days respectively.
The slowest paying sector was electrical, gas and sanitary services with 52 days. It is still an improvement of 0.8 day from the previous quarter and 5.7 days improvement over the past 12 months.
D&B data also shows a difference between South and North Island payments. Firms in the north continue to take longer to pay, average of 45 days, compared to their south counterparts, 42 days.
Christchurch was the quickest paying for the December quarter, while Wellington based firms maintained its position as the slowest with 46.8 days.
