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Aussie businesses took 53.2 days to pay during September quarter

Australian businesses are taking longer to pay their bills, with business-to-business payment terms worsening in the September quarter compared to this time last year.

Dun and Bradstreet Payment TermsPayment terms for Australian businesses blew out by 1.1 days in the September quarter, with it now taking on average 53.2 days for businesses to settle their accounts according to the latest business payments research from Dun & Bradstreet. Despite overall improving business conditions, lagging payment terms continue to impact on business cash flow, with 50 percent of executives surveyed by Dun and Bradstreet noting negative impacts stemming from their slow paying customers.

According to Christine Christian, Dun & Bradstreet’s CEO, executives need to maintain a vigilant focus on the business fundamentals which were deemed critical to survival during the crisis.

“Cash flow and liquidity are vitally important during a period of economic recovery,” said Ms Christian.

“As demand rises, firms need to be able to access funds to take on new staff, increase their inventories and invest in their business. Overcoming this challenge in an environment where cash remains difficult to access requires vigilant cash flow management.

The payment terms of all types of businesses deteriorated during the September quarter 2010 (compared to the prior year). Small businesses (1-5 employees) experienced the most significant deterioration, with payment terms rising by 2 days to an average of 53.2 days.

Conversely, firms with 50-100 employees were the quickest to pay. This group took 49.3 days to settle accounts, making it the only group to record payment terms under 50 days. Yet despite being the quickest to pay, this group’s terms deteriorated by close to one day compared to the previous year.

Other small firms (those with 6-19 and 20-49 employees) were marginally slower than their larger counterparts. Those with 6-19 staff took 50.9 days to settle accounts, while firms with 20-49 employees took 51.3 days to pay their bills. This equates to a deterioration in terms of 1.8 and 1.6 days respectively for the two groups.

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David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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