More than half of Australian executives are being negatively impacted by late payments, says Dun & Bradstreet
July 27, 2010
Businesses are being advised to keep a close eye on their cash flow after new data
reveals more than half of Australian executives
are being
negatively impacted by late payments.
The latest business-to-business payment figures by Dun & Bradstreet (D&B)
show Australian firms took an average of 53.4 days to settle their accounts during the June quarter.
This equates to a 17 percent increase in the number of firms negatively impacted by lagging payments since April.
However, despite firms now being four days quicker to settle their accounts than they were during the height of the GFC, payments exceed the standard 30 day term by more than three weeks and remain above pre-crisis levels.
D&B CEO Christine Christian says the latest data provides a clear sign businesses must continue to focus on the fundamentals of cash flow management throughout the global recovery.
“Business-to-business payment data provides a strong indicator of the cash position of firms,” Christian says.
“The latest data suggests that the cash position of businesses is strengthening however, Australian executives are indicating that the small improvement in terms experienced during the June quarter is not enough,” she says.
According to Christian, access to cash is vitally important during a recovery period as firms seek to meet growing demand.
“Consequently, if we are to experience the significant improvement in terms which is required to positively affect the cash flow of firms, executives need to take prompt action to collect their bills,” she adds.
BUSINESS SIZE
In terms of business size, all groups improved payment terms compared to the previous quarter and the June quarter 2009.
Firms with 50-199 employees were the biggest improvers compared to the previous year, with payments dropping by 4.1 days.
This move made the group the fastest to pay during the June quarter (at 49.4 days) and the only group to pay its accounts in less than 50 days.
On the other hand, firms with 500-plus employees were the biggest improvers compared to the March quarter, reducing the time taken to settle accounts by 2.3 days.
INDUSTRY
The finance sector was the quickest paying group during the June quarter and the only industry to pay its accounts in less than 50 days.
At the other end of the scale, the public administration sector was the slowest paying group (at 56.6 days).
Despite being the biggest improver compared to the previous quarter, the electric, gas and sanitary services sector was the second slowest paying group and was only slightly quicker to settle its accounts ( 56.4 days) than firms in the public administration sector.
Firms in the mining industry experienced the most significant improvement in payment performance compared to the June quarter 2009, taking 3.3 days off the time taken to settle its accounts.
STATE
Firms in Queensland were the only group to experience a deterioration in payments compared to the March quarter 2010, while those based in the Australian Capital Territory, New South Wales, Tasmania and South Australia were all slower to pay during the June quarter 2010 than they were the year prior.