Business cash in fine flow

Last updated 05:00 19/12/2013

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More businesses are paying their bills on time as rising consumer confidence is improving corporate cashflows, a trade credit agency survey shows.

An analysis by Dun & Bradstreet (D&B) of company invoice payments during the three months to September shows that 61 per cent of payments were made within 30 days, an increase from 59 per cent in the previous quarter and 60 per cent a year earlier.

The survey shows that the average time taken for businesses to pay each other has fallen for a second consecutive quarter to 41 days.

Meanwhile, the cashflow position of big companies has benefited from improving consumer sentiment.

As unemployment fell to 6.2 per cent in the third quarter and retail sales grew 0.3 per cent, the survey's index of consumer financial stress settled at -3.7 points, indicating New Zealanders were less stressed about their financial position than at any other time in 2013.

D&B's New Zealand general manager, Lance Crooks, said there was a clear relationship between healthy cashflow and a strong business sector.

"With favourable economic conditions in New Zealand, businesses have had a greater capacity to meet their financial obligations on time and, in turn, invest back into their operations and the economy more generally," Crooks said.

"These September-quarter findings on business-to-business payments are a positive pulse-check on the state of the economy, which was forecast by the Reserve Bank to have grown by 1.1 per cent across that same period.

"With interest rates unchanged this month, positive employment activity and the Christmas spending period under way, businesses look set to end the year in healthy financial position."

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