Daniel Lynch

Daniel Lynch is a digital business reporter for nzherald.co.nz

NZ businesses paying bills in record time

Invoice payment times which typically indicate the financial position of firms, have been falling across New Zealand. Photo / Thinkstock
Invoice payment times which typically indicate the financial position of firms, have been falling across New Zealand. Photo / Thinkstock

Businesses are paying their bills in record time, with the forestry and agriculture sectors winning the prompt payment stakes while the transportation industry is a distant last place, according to credit checking agency Dun & Bradstreet.

Average payment times across New Zealand dipped below 40 days in the final quarter of last year - the fastest rate recorded in the past ten years.

The findings underscore the healthier financial position of many companies and industries over the past year, and the relative strength of the New Zealand economy.

Compared to Australia, where payment times have stalled at an average of 53 days, the corporate sector here has been steadily increasing the rate of its invoice payments during the past 12 months, the D&B report found.

"These findings continue a clear and positive trend in the performance of the corporate sector, and follow additional positive movements in business and consumer confidence, the current account deficit and jobs growth," said D&B managing director Dennis Martin.

Businesses paying their bills in the standard 30-day period rose to 66 per cent, from 61 per cent in the same period the previous year.

When local businesses experience stronger sales and profitability they have a greater capacity to pay their expenses in a timely fashion, which in turn returns finance back into circulation providing a positive knock-on effect through to the entire economy, Martin said.

"Our forecasts are for New Zealand's key economic measures to continue improving this year, and consequently we also expect to see consolidation of this trend of faster business payment times," he said.

The forestry sector was the fastest to settle accounts during 2013, with payments by the country's third largest export sector improving to an average of 33 days.

The agriculture industry also cleaned up its act, with average payment times moving to 36 days, compared to 37 days last year.

The transportation sector showed a marked account settling slow down during 2013, with the average payment time going from 39 days to 47 days.

While smaller operations recorded faster invoice payment times, larger companies bucked the trend over the final three months of 2013, with average payment times slowing compared to the previous year.

New Zealand businesses employing between 200 and 499 people were one day slower to settle their accounts, while larger operations were significantly slower.

D&B's analysis found that companies with more than 500 staff paid their invoices in an average of 45 days, up from 41 days.

"Even though the Reserve Bank has commenced an interest rate tightening cycle, the boost to the economy from the dairy sector, construction and household spending is likely to see company payment times remain low for at least the near term," said Stephen Koukoulas, Economics Advisor to Dun & Bradstreet.

- NZ Herald

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