Credit analysts Dun & Bradstreet have, since January last year, downgraded 44,000 New Zealand companies' chances of paying their bills on time and classed a further 38,000 as being at an elevated risk of failing within the next 12 months.
Dun & Bradstreet analysed a range of measures, including trade payments, court actions, collections and financial data, for 518,000 companies over 15 months. Chief executive John Scott said it was "probably the most comprehensive assessment of risk and payment behaviour of NZ companies".
He said the findings were surprising "even to us".
"We knew there were issues but this was by far the worst we've ever seen."
The 38,000 firms at increased risk of failure was 28 per cent up on the previous 15-month period and the 44,000 firms at increased risk of delinquent payment was up 26 per cent.
Scott said the downgrades were a clear sign the credit crisis was taking a toll on the real economy and the outlook for trade credit - "the lifeblood of the economy" - was deteriorating.
Dun & Bradstreet reclassified after March quarter data showed business-to-business payment terms were running at about three weeks above the standard measure. That showed cash flow pressures were prevalent.
The increased risk of delinquent payment was seen as a leading indicator for increased risk of failure and therefore "we expect more pain before we turn the corner".
Dun & Bradstreet was unable to provide the Herald with data showing what proportion of firms it deemed to be at increased risk of failure went on to receivership or liquidation.
Younger companies, those in the service sector and North Island-based firms had the highest number of downgrades.
38,000 firms at risk, say analysts
AdvertisementAdvertise with NZME.