After jumping to a three-year high during the first quarter of 2014, the average time taken for commercial invoices to be paid has fallen sharply to 53.4 days, according to a new Dun & Bradstreet report.
The findings of Dun & Bradstreet’s Trade Payments Analysis report suggest that businesses are now getting their finances back in order and are paying more of their bills within standard terms. According to the D&B report, 47.3 per cent of invoices were paid within a 30-day period during Q2 2014, an increase from 42.9 per cent in the previous quarter, and just 38.5 per cent at the same time last year.
While the analysis reveals that more than half of all invoices are still being settled beyond standard terms, the improvement has taken business-to-businesses payments times to the fastest level for a second quarter period since 2007. At 53.4 days, businesses are paying their invoices three days earlier than in the previous quarter and one day faster than in Q2 2013.
“Payment times typically improve in the three months to June as businesses get their houses in order following a first quarter affected by summer trading hours and a traditionally slower payment cycle,” said Gareth Jones, CEO of Dun & Bradstreet–Australia and New Zealand. “This most recent correction, however, is sharper than we saw last year and aligns with other positive data from the first half of 2014, such as fewer company failures and declines in late payment and failure risks.
“The prompt payment of invoices is critical to a healthy cashflow, which has been an issue of significant concern for businesses.”
Businesses of all sizes have improved their payment performance over the past 12 months, although D&B found that the economy’s largest operators have shown the least progress. According to D&B, companies employing more than 500 staff are consistently the slowest to pay their accounts, and in the second quarter of the year these firms took an average of 55.6 days; three days slower than the national average.
Meanwhile, despite their smaller financial reserves, micro-businesses with between one and five employees have been clearing their invoices in an average of 51.7 days, two days earlier than in Q2 2014. At an average of 46.3 days, those businesses employing between 50–199 people have been the fastest payers.
Across industries, those businesses in the fishing sector have been the fastest to pay their accounts, at an average of 48.8 days, down from 51.4 in the previous quarter and 51.1 a year earlier. Year-on-year the biggest improvement has come from the construction industry, while the slowest paying companies have been those in the mining and utilities industries.
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