Late payments are an issue around the globe in small, medium and large businesses. According to Australasia data and analytics provider illion, late payments in New Zealand are increasing, yet that was expected due to seasonality.
The most recent late payments report for the island nation shows nearly a quarter of businesses were paying invoices late—an average of roughly a week past due—during the June 2019 quarter. This is up 4.2% from the quarter prior; however, the rate is 1% below the same period in 2018. It is typical for late payments to increase in March quarters, decline in the June and September time period and rise in the December quarter, states the illion report.
"The recent fluctuations in late payments largely reflect seasonal variations, although macroeconomic influences continue to have some impact," said illion Economic Advisor Stephen Koukoulas. "The lower level of late payments over the past five years or so reflects a structural change, with businesses increasingly adopting new technologies and systems such as internet banking and direct debits, which have resulted in bills being paid faster."
Larger businesses (500-plus employees) are the main culprit of late payments. "Small businesses are the engine room of the New Zealand economy, but are often at the mercy of the largest companies, that average being 9.2 days late with their payments, almost twice as long as much smaller organisations," said illion CEO Simon Bligh in a release. This was a 3.4% increase year-over-year.
"The recent stability in payment times reflects conflicting news in the economy—with business cash flows boosted by low interest rates, but hampered by the slowing economy," said Koukoulas.
-Michael Miller, managing editor