Business cashflow remains under pressure: survey

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The cashflow of New Zealand businesses is expected to remain under pressure during 2011, as an increasing number of firms fail to pay their bills, a leading credit bureau says.

The research from Dun & Bradstreet revealed that businesses took longer to pay each other during the December quarter, while the number of firms with outstanding debts also increased.

An additional four per cent of New Zealand firms failed to pay their trade credit accounts during the December quarter 2010 when compared to the previous year.

The findings coincide with figures which reveal the time businesses are taking to pay each other has also risen - New Zealand firms took 43.9 days to settle their trade accounts during the December quarter, a figure which remains two weeks above the standard 30 day payment term.

Dun & Bradstreet's New Zealand general manager John Scott said the trend by businesses to delay bill payments had the potential to inflict cashflow difficulties on a large number of firms.

"This is worrying as it can draw more and more businesses into the late payment cycle, making it increasingly difficult for firms to escape the pressures associated with slow paying customers," he said.

"In addition, the time businesses are taking to pay each other has also increased, which means firms are being denied access to their cash for longer.

"For small firms in particular, this type of delay in receiving payment for products or services could push a business into severe financial stress," he said.

The slowest paying sector during the quarter was the electric, gas and sanitary services industry which took 51.2 days to pay its bills.

The quickest paying group was the agriculture sector, which took 39.9 days to pay, making it the only industry that took less than 40 days to settle its accounts.

- NZ HERALD ONLINE