New Zealand invoice payment times marginally increased in Q4 2015 after rapid declines throughout the first half of the year. Dun & Bradstreet’s Trade Payments Analysis shows New Zealand businesses took 35.8 days on average to pay their invoices during Q4 2015. According to Stephen Koukoulas, Economic Advisor to Dun & Bradstreet, New Zealand’s low interest rates maintained invoice payment times for Q4 2015 near first half levels.

“New Zealand businesses remain in a good position with the invoice payment times remaining near historical lows,” Mr Koukoulas said.

Invoice payment times dropped to record lows in the first half of 2015, hitting 35.0 days in Q2 2015. However, increases in payment times in the final two quarters indicate a flatlining of payment times heading into 2016. Mr Koukoulas said interest rate cuts by the Reserve Bank of New Zealand (RBNZ) could influence future payment times this year.

“With the RBNZ likely to cut interest rates in the months ahead, the cash flow position of the business sector is likely to remain favourable,” Mr Koukoulas said.

The Q4 2015 result was three days faster than the same quarter last year, when companies took 38.9 days to pay their invoices. Payment times leveled at 35.3 days in Q3 2015, implying a further drop in the final quarter of the year was unlikely. Mr Koukoulas said New Zealand’s steady economy has improved firms’ cash flows, which would support economic growth in over the medium term.

“Historically low interest rates are clearly a main influence on the speed at which bills are paid,” Mr Koukoulas said.

A two-percentage point decline in companies paying their bills in 1-30 days to 83 per cent drove the quarterly increase in payment times between Q3 2015 and Q4 2015. Meanwhile, 14 per cent of businesses paid their bills within 31-60 days, compared to 13 per cent in the previous quarter. The 1 per cent increase drove a rise in average payment times to 35.8 days, as more companies took longer to pay their bills.

Kevin De Beer, Managing Director for Dun & Bradstreet New Zealand, said external sentiment and volatility in global markets played a hand in causing payment times to tick higher. However, Mr De Beer said a continuation of the payment time declines seen over the last few years was likely unsustainable.

“We’re seeing an inevitable flatlining of payment times with business cash flows in a historically sound position under low business input prices, non-existent wage growth and low interest rates,” Mr De Beer said.

The Agriculture, Forestry and Services industries were the only sectors to beat the national average payment time of 35.8 days by at least one day during Q4 2015. Meanwhile, the Forestry industry booked the fastest payment time at 31.8 days, almost two days faster than the previous quarter.  Mr De Beer said the Agriculture sector would continue to play the lead factor given its importance to the New Zealand economy.

Businesses across all sectors, except for the Fishing industry, paid their invoices faster in Q4 2015 compared to the same period last year. The Fishing industry settled their invoices in 38.9 days during Q4 2015, around three days higher than the national average. Payment times in the Communications industry improved the most, from 38.8 days in Q3 2015 to 36.5 days in the final quarter.

The New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion for the December 2015 quarter found business confidence strengthened during the period.

The surveyshowed a net 13 per cent of businesses expected New Zealand’s economy to strengthen over the coming months. This pointed to a rebound in consumer confidence, after a net 9 per cent of businesses expected conditions to deteriorate in the previous quarter.

Across all sectors, businesses with between 6 and 19 employees were the fastest to pay their invoices at a rate of 34.9 days, followed by business with between 50 and 199 staff. Companies with more than 500 employees took the longest to settle their invoices at 40.8 days for Q4 2015.

Businesses with 50 to 199 staff narrowed their average payment times by two days between Q3 2015 to Q4 2015, from 37.0 days to 35.2 days. Meanwhile, companies with between 50 and 199 staff were the only group to settle their invoices at a faster rate than the previous quarter.

Businesses in both the North Island and South Island paid their invoices at a similar rate to the previous quarter. North Island businesses booked an average payment time of 36.3 days, while South Island businesses booked 34.7 days for the last quarter of 2015. Increases in North Island and South Island average payment times were mirrored by slightly slower payment times in the main cities of Auckland, Wellington and Christchurch.