Company Bill Payment Fastest In Almost Two Years
AUCKLAND, May 28
Businesses are paying their bills faster than at any time in almost two years, according to the latest Dun & Bradstreet New Zealand Trade Payment Analysis (NZTPA).
Released today, the NZTPA covers the period from February 1999 to December 2001. It shows that in December 2001, average trade payment days reached a 22 month low of 47 days - 10 days below the May 2000 peak of 57 days.
Also released today, D&B’s New Zealand Trade Credit Analysis (NZTCA) figures show a massive spending splurge in the third quarter of 2001, the highest in over two years.
Jeremy Bowen, General Manager, Dun & Bradstreet New Zealand, said the fall in average trade payment days was a reflection of the strengthening NZ economy. He said it also indicated increased vigilance in debt management.
"Clearly, in the middle of 2000, businesses were unsure of where the economy was heading. Consequently, they held off on paying their creditors to preserve cash reserves,” Mr Bowen said.
“This is reflected in the latest NZTPA, which shows average trade payment days blowing out in April and May 2000. In this period the NZTPA went above 55 days for the first time since D&B started recording the figures in February 1999,” he said.
Mr Bowen said continued economic growth over the past 12 months had put companies in a better position to pay their bills more quickly.
“It would also appear that businesses have played their own role in reducing trade payment days, with many companies tightening terms of payment and outsourcing their receivables management function to call in debts faster,” he said.
Mr Bowen said the improving economic conditions could also be seen in the latest NZTCA figures.
“In the first quarter of 2000, average trade credit levels were only just above $1,000. As the economy picked up in 2001, so did spending, with trade credit levels peaking at $5,504 in the third quarter - an increase of more than $4,000.
“Trade credit spending levels fell away again in the fourth quarter of 2001, possibly due to the ramifications of September 11,” he said.
Mr Bowen said that as business conditions continue to improve in 2002, average payment days are likely to shorten further.
“To maintain this trend, it’s important that the Reserve Bank does not apply the monetary brakes too hard. If interest rates rise too quickly, business activity could be stifled, particularly with the $NZ continuing to rise,” he said.
The latest NZTPA shows that average trade payments have fallen across all industries since May 2000.
Manufacturing continues to be the slowest paying industry overall, peaking at 60 days in May 2000 and falling to 51 days in December 2001. Retail is the fastest paying industry at an average of 41 days in December 2001, after going against the trend to peak at 61 days in September 2001, just three months earlier.
As of December 2001, wholesale was the second fastest paying industry, followed by services and then manufacturing - in that order.
About D&B’s Trade Information Program
The Trade Information Program at Dun & Bradstreet collects the business to business age trial balances of medium to large companies on a monthly basis. This data is cross-matched to Dun & Bradstreet’s extensive database and makes up 98% of D&B’s trade database, giving an objective view on how companies pay their accounts.
Each year, D&B processes over eight million trade and credit references, giving D&B New Zealand the most comprehensive record of business to business transactions in the country.
About Dun & Bradstreet Australia & New Zealand
Dun & Bradstreet is the world’s leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world’s most valuable commercial database with information on more than 71 million companies. Information is gathered in 209 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B’s commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B’s history worldwide. Today, AMP Henderson owns a 77.5 per cent stake in DBA, the local management team a 20 per cent stake and the D&B Corporation 2.5 per cent. Future plans for DBA include an IPO of the business in 2004. Strategies for future growth include developing DBA’s commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 400 people in Australia and New Zealand.