Wellington-based firms remain the slowest in the country to pay their bills but the entire country is slipping back in its payment times, according to Dun & Bradstreet.
The latest business-to-business trade payment figures released by the credit report agency show that the average time taken to pay bills had slipped by two days in the March quarter to 46.6 days.
New Zealand firms had been getting slowly better at paying their bills quickly over the last three quarters but after reaching a plateau last quarter, those gains have been largely wiped out by the latest result.
According to Dun & Bradstreet’s analysis of the millions of current accounts receivable records contained in its database, Wellington firms recorded their third consecutive quarter as the slowest paying group, taking an average of 49.8 days to settle accounts, an increase of 3.1 days on the previous quarter.
Auckland was the second slowest major city with 48.0 days to pay, while Christchurch firms took an average of 44.8 days.
North Island firms have traditionally been slower to pay their bills than South Island firms and this has continued with payment terms increasing by 2.1 days to 47.1 days, compared to the South Island’s 1.6 days increase to 43.6 days.
The electric, gas and sanitary services sector is the slowest to settle accounts, taking an average of 54.7 days, 14 days longer than the mining sector, which is the fastest individual industry.
The finance sector experienced the most significant increase in payment terms with a rise of 3.4 days.
Public companies are also slower to pay than their private counterparts, although the gap has narrowed, with the difference reduced to 0.4 days after private companies added 2.1 days to their payment terms and public firms cut their payment time by 2.3 days.
The overall decline in payment terms could see further pressure on liquidity and access to cash if they continue the current trend, according to Dun & Bradstreet NZ general manager John Scott.
“If payment terms continue to deteriorate in the months ahead, firms may find themselves battling the cashflow pressures that affected business growth and stability during the height of the credit crisis.”
Tue, 27 Apr 2010