KEY POINTS:
Foreign-owned companies operating in New Zealand have a higher risk of failure and are more likely to pay their bills late compared with locally owned businesses, a survey by the debt collection agency Dun and Bradstreet has found.
The research shows foreign-owned companies have a 1.3 per cent chance of failure over the next 12 months compared with a 0.8 per cent chance of failure for local businesses.
Australian-owned companies, which make up 47 per cent of all foreign-owned companies in New Zealand, are also more tardy when it comes to paying their bills.
Of all the payments made by Australian-owned firms, 42.3 per cent are paid more than 30 days past their due date.
This compares with locally owned companies where 41.4 per cent of bills are paid more than 30 days past their due date.
British companies also had a higher rate of overdue payments when compared with their presence in New Zealand.
Only 13 per cent of the foreign owned companies are from Europe but 23.6 per cent of payments owed by British firms had not been settled more than 30 days past their due date.
Dun & Bradstreet New Zealand general manager John Scott said the results had important implications for companies doing business with foreign-owned companies.
"Creditors need to pay attention to the payment habits of customers, no matter how big they are or where they come from, or risk the negative impact of cash flow troubles on operations," he said.
"Data regarding risk ratings and payment history are important indicators of business strength and sustainability. Organisations should consider this information prior to the extension of credit."
The research also found Australian companies had a much higher risk of failure in the next year compared with New Zealand companies. Nearly 10 per cent of Australian companies are rated a high risk compared with 1.8 per cent of New Zealand companies.
The risk rating is based on several factors including court actions, collections, financial data, trade payment information, director court actions and registered charges.
In New Zealand the highest risk industry was services at 3.1 per cent followed by wholesale and construction both on 2.4 per cent.
Smaller companies were also found to be more vulnerable with those with one to four staff having a 3.4 per cent chance of a high risk of failure and companies with between five and nine employees having a 6 per cent chance.
The figures were similar for smaller companies in Australia where 6.1 per cent in the one-to-four-person category were classed as having a higher risk of failure and 6 per cent in the five-to-nine-person category.
RISK FACTOR
* Foreign-owned companies operating in New Zealand have a higher risk of failure than New Zealand companies.
* Australian-owned companies take longer to pay their bills than New Zealand companies.
* Almost half of all foreign-owned companies are Australian.
