Australian businesses are paying their bills.
The latest Dun and Bradstreet Trade Payments Analysis shows that “Australian businesses settled their invoices at a new record-setting pace of 45.1 days on average in Q3 2015.” That’s down from 49.2 days in the second quarter and 51.7 days in in Q3 2014.
This is huge, because cashflow is the lifeblood of business and lower average payment days suggests improved health for Australian businesses. Dun and Bradstreet also say it’s important because “business-to-business payment information is a highly predictive data set and a critical element in credit risk scores and business failures forecasting”.
Stephen Koukoulas, economics advisor to Dun & Bradstreet, said in a note accompanying the survey that the big fall in time taken to pay invoices “suggests firms are experiencing favourable cash flows.” Driving that he said was “a combination of savings from record low interest rates, reasonable income growth and on-going economic expansion.”
So firms are better placed to “pay their bills more quickly than at any time in many years,” he said.
On a state basis the survey found that:
Businesses in Queensland, New South Wales and Victoria paid their invoices around four to five days faster than in Q2, while businesses in Tasmania, the Northern Territory, Queensland and New South Wales reported an improvement of at least one week compared to average payment times in Q3 2014.
image url=”http://edge.alluremedia.com.au/uploads/businessinsider/2015/10/DB-States.jpg” caption=”D&B – Trade Payments Analysis Survey Q3 2015″ align=”center” size=”primary” nocrop=”true”]
This survey serves to underscore the improvement in Australian business conditions and confidence seen in recent months in the NAB Business survey.
It also suggests, along with today’s release of rock-solid consumer confidence, that the RBA will be in no rush to ease rates at next week’s Board meeting.