Dun and Bradstreet - Trade Payment Analysis

30 March 2006

Australian Trade Payments Continue to Worsen

There has been a continued decline in business to business trade payments this year, signalling greater cash flow and credit risks for business, with small business the most likely to feel the impact.

The February figures, released today in the Dun & Bradstreet (D&B) Australian Trade Payment Analysis (ATPA), show trade payments remain almost double standard trading terms.

Figures reveal the average trade payment period is now 58 days, over a week longer than at the end of the first quarter in 2005. The standard payment term is 30 days.

The slowest paying industry in February continues to be the Mining industry which increased almost seven days since February 2005 (now standing at 61 days). It was closely followed by Manufacturing and Transport & Communications which were tied at 59 days. The fastest is Agriculture, Forestry and Fishing.

Since the last survey in October 2005, trade payments have increased on average three days across all industries. Of particular concern was the Construction industry which jumped almost four days (55 to 58.5) from the last quarterly results.

Trade Payment Survey 2006	Average as of February 2006
Sectors	Average Days (February 06)	Average Days (February 05)
Agriculture, Forestry & Fishing	55.8 days	46.6 days
Construction	58.5 days	47.8 days
Finance, Insurance & Real State	58.1 days	49.1 days
Manufacturing	59.0 days	52.6 days
Mining	61.3 days	54.6 days
Retail	57.1 days	47.7 days
Services	57.0 days	49.2 days
Transport & Communications	59.0 days	49.4 days
Whosale	58.4 days	50.4 days
Public Administration	56.0 days	52.3 days
All Industries	58.1 days	50.0 days

D&B Australasia Chief Executive Officer, Christine Christian, said further deterioration of trade payments is of major concern in particular for small and medium d businesses, who are continuing to struggle with adverse payment conditions.

"The current payment climate being faced by many Australian companies with regards to trade payments is not something new. However, this new data shows that the situation is likely to become dire for small and medium d businesses, with the majority of industries now taking almost a week longer to pay their invoices since February last year.

"It is clear that the extension of payment periods needs to be addressed, otherwise this negative trend will continue to play havoc with the stability of the SME market and Australian business at large.

"The future of the economy continues to be uncertain. If businesses do not concentrate on correcting cash flow and debt management practices it is likely we will see a dramatic increase in company insolvencies."

Media notes

For further information and comment please contact:

Jennifer Green,
Hill and Knowlton
Ph: (02) 9286 1225

Chris Gray,
D&B Australia
Ph: (03) 9828 3472