Business suffers as payment terms rise: D&B


Queensland firms experience the most significant slowdown in business-to-business payments in the September quarter

Business suffers as payment terms rise: D&B
Business suffers as payment terms rise: D&B
October 19, 2010

Queensland-based firms have experienced the most significant slowdown in business-to-business payments in the September quarter compared to this time last year, according to new data by Dun & Bradstreet (D&B).

The state’s businesses recorded average payment terms of around 53 days over the quarter, a slowdown in payments of 2.4 days compared to 2009.

Australia-wide, firms took 53.2 days to settle their accounts during the September quarter, a result which represents a deterioration of 1.1 days compared to the previous year.

The Australian Capital Territory was the slowest paying state, with firms averaging 55 days to settle their trade accounts.

Western Australian based firms were the quickest paying group during the September quarter taking an average of 51.2 days to settle their trade accounts.

The latest business payments research from D&B reveals that despite improving economic conditions, payment terms currently exceed the standard 30-day term by more than three weeks and remain above pre-crisis levels.

BUSINESS SIZE

The payment terms of all groups deteriorated during the September quarter 2010 (compared to the prior year).

Small firms (1-5 employees) experienced the most significant deterioration, with terms rising by two days to an average of 53.2 days.

Firms with 500+ employees were the slowest to pay, averaging 56.5 days to settle accounts.

Meanwhile, firms with 50-100 employees were the quickest to pay.

This group took 49.3 days to settle accounts, making it the only group to record payment terms under 50 days.

D&B’s CEO Christine Christian says executives need to maintain a vigilant focus on the business fundamentals which are deemed critical to survival during the crisis.

"Cash flow and liquidity are vitally important during a period of economic recovery," Christian says.

"As demand rises, firms need to be able to access funds to take on new staff, increase their inventories and invest in their business," she says.

"Overcoming this challenge in an environment where cash remains difficult to access requires vigilant cash flow management."

INDUSTRY

The communications sector experienced the most significant increase in payment terms despite all sectors taking longer to settle their accounts during the September quarter.

This sector’s terms increased by 4.9 days to average 58.8 days to settle accounts, yet despite this significant increase, the communications sector was not the slowest paying group.

The electric, gas and sanitary services sector took this position, with average payment terms of 59.8 days.

The forestry sector was just behind the electric, gas and sanitary services industry, averaging 59 days to settle accounts – this followed an increase of 4.5 days compared to the September quarter 2009.

The mining sector came in fourth on the slowest payers list – an increase of 1.2 days over the past 12 months took terms to 56.2 days.

Meanwhile, the agriculture sector was the quickest to pay during the September quarter, taking 51 days to settle its accounts.

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