Listed companies delay bill payments even further

Payments seem to be slipping further past the deadline mark as the latest Dun & Bradstreet Trade Payments Analysis indicates both publicly and privately listed firms have been taking longer to pay their bills.

Publicly-listed companies took a week longer than private sector firms to pay bills in the 2011 December quarter, the largest disparity between the sectors in over four years.

Payment terms for listed firms took two days longer than the September quarter at an average of 51 days, and 5.8 days longer than it took 12 months ago.

Private firms, however, took only half a day longer than the same quarter last year, on par with the national average of 44.6 days.

While listed companies have historically taken longer than private firms to pay accounts, the latest spike in data brought payment terms for listed companies to their highest in over ten quarters, following a steady rise over the past two years.

General manager of Dun & Bradstreet, John Scott, said poor bill payment management skills could be “potentially hazardous” to their financial health, given that firms on the stock exchange make significant contribution to New Zealand’s economy.

Larger firms, with 500 or more employees were the slowest to pay off their bills at 49 days, compared to bills payed by smaller firms with fewer than 20 employees during the December quarter at 43 days.

“Wherever possible, small businesses pay their bills as soon as they can because they have tighter cash flow cycles,” said Mr Scott.

“Large businesses with more generous cash reserves are more able to stem any short-term cash flow problems and hence are less likely to fail. This is extremely worrying given the long-term implications of not paying [their bills] on time.”

Regionally, Christchurch businesses performed best, with an average payment term of 45.1 days, while firms in Auckland took the longest to pay their bills on 46.3 days.

Slowest paying industries were electric, gas & sanitary service and communications industries, with payment terms of 52.8 days and 52.2 days. Forestry turned out to be the fastest paying industry at 39.3 days, down 2.7 days in the past 12 months.

No changes in payment terms were recorded for the transportation and public administration sectors.