A key litmus test for the state of the economy is the number of days it takes for overdue bills to get paid.
illion’s Trade Late Payments Report is the most comprehensive in the market. And our latest report for the 2020 December quarter shows the New Zealand economy has remained resilient.
For much of 2020, payment times were actually better than in 2019. However, by the December quarter, payment times deteriorated by 10% compared to the same time last year.
So, while the deterioration has not worsened further, late payment times remain slightly slower than before the pandemic hit.
Big business misses out
When looking at who is paying whom on time, illion’s figures show that big businesses are the biggest losers – no matter who owes them money.
Small and large businesses both seem to prioritise smaller businesses when settling late payments. That’s good news for New Zealand’s 8,000 plus SMEs.
How about by sector? We’ve taken a look at the fishing and utilities industries.
Stormy seas ahead
The fishing sector maintained its strength amid the pandemic as it is considered an essential service, but global trading conditions remain tumultuous. Payments have remained consistent since the June quarter at 7 days.
But looking ahead, the industry risks becoming understaffed as foreign crews are unable to obtain work visas under current border restrictions.
Utilities running out of gas
Utilities started struggling with late payments over the course of the last decade.
The sector broadly sat ahead of the average late payment days for the first half of the 2010s but fell behind in the last five years, with payment times deteriorating from 2017.
Towards the end of 2020, the sector’s payment times broke away from the average again.
Perfectly prompt payments
The carnage of 2020 has had little impact on New Zealand’s prompt payments rate.
Even as late payment times have extended through the last three quarters of the year, the rate of businesses paying their bills on time has held steady at 80% for three consecutive quarters.
Looking at late payment times, the domestic economy has proven resilient.
But companies should understand what is happening in their specific industry and to similar sized businesses to get the full picture.
To learn more about how your business can participate in and benefit from illion’s trade data program, get in touch with us.