The payment terms of Australian firms have declined for the second consecutive quarter, providing further evidence that local economic conditions are improving, according to Dun & Bradstreet.
According to findings from Dun & Bradstreet’s (D&B) latest trade payments analysis, payment terns have fallen three days since the previous quarter, and 5.6 days in the past six months, reducing overall terms to 51.8 days, a level which is just above pre-crisis terms.
However, despite the fact that business-to-business payments terms are the lowest level since 2007, they remain well above the standard 30-day terms and continue to have a negative impact on business.
Small firms (between six and two hundred employees) were found to be the quickest to pay, averaging less than 50 days to settle accounts in the September quarter; while those with 50-199 employees were the biggest improvers, averaging 48.4 days to settle accounts, an improvement of 5.5 days quarter-on-quarter and 5.3 days year-on-year.
According to Damian Karmelich, Dun & Bradstreet’s director of corporate affairs, while the latest data is positive it is also a clear sign that businesses must maintain their renewed focus on the fundamentals of sound business management.
The latest trade payments data provides a clear indication that the Australian business environment is improving,” he said.
“However, now is not the time for businesses to relax thinking the worst is behind them. Many firms experienced a period of stress because cash flow and credit risk had not been a top priority and they were caught off guard when the global crisis reached our shores.”