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Kiwi Businesses Slow to Pay but Pay they do

MEDIA RELEASE
Kiwi Businesses Slow to Pay but Pay they do

Almost half the 250 small businesses recently surveyed by Baycorp Advantage reported that their invoices were paid after the due date. Hamilton (70%) and Dunedin (56%) were the worst offenders in terms of late payments with Auckland (48%) and Wellington (44%) almost identical.

The Payment Cycle Monitor was “a revelation”, said Baycorp Advantage’s NZ Country Director, John Roberts.

“The initial data suggested that some of the doom and gloom emanating from earlier Australian surveys was also fact of life in New Zealand. Our study refutes this, demonstrating instead that, at the moment, we are a nation of slow payers, not non-payers,” Roberts stated.

Very few NZ small businesses are placed at risk by late payment, with 87% writing off less than $10,000 in unpaid debt in the past year and 77% writing off less than $5,000.

“The level of risk of slow payment converting to debt write-off appears low. It’s the Kiwi business intimacy thing coming through – we’re prepared to cut a little bit of slack because we have a lot of confidence in each other. One of the consequences of this is the adaptation of the small business environment to the slow payment cycle,” he added.

Nationally, the study revealed that more than 60% of small businesses will write off either no debt or less than one per cent of their invoicing. In Christchurch the figure is 78%, Wellington (72%), Auckland (62%), Dunedin (64%) and Hamilton (62%).

Overwhelmingly the study demonstrates a high level of trust within the small business community where only 12% believe that less than 5% of their bad debts are deliberately incurred through fraudulent behaviour. Six out of ten of those surveyed thought that fraudulent behaviour bore no part in bad debt development.

“One major concern emanating from the study” says Roberts “is the concern from experienced businesses , 29% of whom think that fraudulent behaviour trends are rising.”

Auckland (28%), Hamilton (34%) and Dunedin (40%) are the most concerned regions.

The Baycorp Advantage study also identifies that sole traders are the most at risk group. This group reverts to personal savings and loans when the invoice payment cycle affects cashflow.

Roberts acknowledges that the information from the study mirrors the national economic conditions where low slow growth seems to be occurring.

“Our study reflects the need for ongoing monitoring of the invoice payment cycle in the small business sector as this sector provides a key signal re the health of the national economy.”

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The Baycorp Advantage Payment Cycle Monitor was conducted in the last 2 weeks of October 2007.

250 telephone interviews were conducted, equally distributed across Auckland, Wellington, Christchurch, Hamilton and Dunedin.

All companies were in the 1-100 employee range.

ENDS

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