Listed companies put off paying the bill

Payment terms for listed firms average 51 days, two days longer than the September quarter and 5.8 days longer than 12 months ago. Photo /Thinkstock

Publicly-listed companies took a week longer than the private sector to pay their bills in the December quarter, the largest disparity between the sectors in four years, according to debt collection agency Dun & Bradstreet.

Payment terms for listed firms average 51 days, two days longer than the September quarter and 5.8 days longer than 12 months ago. Private firms were on par with the national average of 44.6 days, half a day longer than the same quarter last year.

Historically, listed companies have taken longer than private firms to pay their accounts, but the latest spike brings payments terms for listed companies to their highest in ten quarters, after a steady rise over the past two years.

"This is indicative of an inherent mismanagement of cash flow that can be potentially hazardous to their financial health, given that firms on the stock exchange contribute significantly to the New Zealand economy,'' John Scott, general manager of Dun & Bradstreet said in a statement.

Larger firms, with 500 or more employees, were the slowest bill payers at 49 days, compared to smaller firms, with fewer than 20 employees, at 43 days, during the December quarter.

"Wherever possible, small businesses pay their bills as soon as they can because they have tighter cash flow cycles,'' Scott said. "Large businesses with more generous cash reserves are more able to stem any shot-term cash flow problems and hence are less likely to fail. This is extremely worrying given the long-term implications of not paying on time.''

The slowest paying industries were electric, gas & sanitary service and communications industry, with payment terms of 52.8 days and 52.2 days. Forestry was the fastest paying industry at 39.3 days, down 2.7 days in the past 12 months.

The transportation and public administration sectors recorded no change in payment terms from the last quarter.

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