Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Payment times plummet

Payment times plummet

Falling dairy prices expected to hit future cash flow


Commercial cash flow appears to be in rude health, with analysis of invoice payments revealing that businesses are paying each other with record speed, although continued falls in dairy prices are expected to affect future performance.

Dun & Bradstreet’s Trade Payments Analysis shows that the average time taken by businesses to pay their invoices dropped to 37 days during Q1 2015, the fastest rate on record, down from 39 days in the previous quarter and 41.5 days last year.

The improvement follows a jump in the proportion of accounts settled on-time (within 30 days), which reached 79 per cent in the three months to March, up from 71 per cent a year earlier.

According to Dennis Martin, Managing Director of Dun & Bradstreet in New Zealand, the latest findings reveal the cash flow benefit from the economy’s performance through 2014, although there are concerns about a slowdown in growth and the affect of falling dairy prices.

“With the Kiwi economy expanding at more than three per cent through last year and consumer spending hitting a high, businesses have been benefitting from a cash injection,” said Mr Martin.

“As the numbers show, this has helped owners to stay on top of their cash flow, settle more of their bills on time, and in turn move money back through the economy more quickly.

“There are signs, however, that the economic performance is easing, with data out this month showing first quarter GDP growth of just 0.2 per cent, and a seventh consecutive fall in dairy prices.

“Based on this, we expect to see a tightening of cash flow in the agriculture sector, which will in turn have a knock-on effect to payment times through the rest of the economy,” Mr Martin added.

Despite these future expectations, Dun & Bradstreet’s Trade Payments Analysis shows that the agriculture industry paid its invoices in an average of 35 days during the first quarter of the year, two days ahead of the national average and down from 39 days in Q1 2014.

The biggest improvement was recorded by the transportation sector, with its payment times dropping by 11 days compared to last year, to an average of 39.9 days in Q1 2015. The utilities sector also recorded a significant fall in payment times, moving from 48 days to 38 days over 12 months, with both industries benefitting from the sharp drop in oil and fuel prices at the end of last year. The forestry sector, however, was the fastest paying in Q1 2015.

The communications sector was the slowest to pay its invoices, averaging 41.8 days in the first quarter of the year. Despite its significant year-on-year improvement, the transportation industry remained the second slowest to make payments.

Across sectors, the country’s small businesses have been the fastest to settle their accounts. Businesses with between 6–19 employees averaged 36.3 days to pay their bills, down from 40.3 days at the same time last year. Meanwhile, those with fewer than five employees averaged 37.9 days in Q1 2015, down from 40.8 days in 2014.

Big business is the slowest to pay commercial invoices. At an average of 42.5 days, companies employing more than 500 people took five days longer than the national average to pay their accounts during the first quarter of the year, while those with between 200–499 staff were the next slowest, at an average of 40.6 days.

Across the South Island, businesses paid their invoices in an average of 35.6 days, with those in Christchurch averaging 36 days. Businesses based on the North Island were marginally slower, at 37.5 days, while both Wellington and Auckland averaged higher payment times of 38.4 and 39 days respectively.

“The general strength in the New Zealand economy over the past year has fed into a further sharp fall in trade payment times,” said Stephen Koukoulas, Economic Adviser to Dun & Bradstreet.
“Firms are clearly using this positive cash flow to pay their bills more quickly than ever before.
“While the rate of economic growth appears to be slowing, business cash flow will receive some support from an easing of interest rates,” Mr Koukoulas added.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

TradeMe: Property Prices In Every Region Hit New High For The Very First Time

Property prices experienced their hottest month on record in December, with record highs in every region, according to the latest Trade Me Property Price Index.\ Trade Me Property spokesperson Logan Mudge said the property market ended the year with ... More>>

Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>

ALSO:

University of Auckland: Pest-Free Goal Won’t Be Achieved Without New And Better Tools

New Zealand’s goal to become predator free by 2050 will remain an unrealised dream unless new technologies and advances in social engagement continue to be developed, researchers who first promoted it say. A team from the University of Auckland has ... More>>

OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>

NIWA: 2020 - NZ’s 7th-warmest Year On Record

The nationwide average temperature for 2020, calculated using stations in NIWA’s seven-station temperature series which began in 1909, was 13.24°C (0.63°C above the 1981–2010 annual average). New Zealand’s hottest year on record remains 2016, when... More>>