Close to 20,000 New Zealand firms had their risk profile revised in the first three months of 2010, according to new research released today by credit reporting agency Dun & Bradstreet.

The research reveals that close to 9,000 firms had their rating downgraded and are now more likely to experience financial distress over the coming year despite the economic recovery. Meanwhile, more than 10,500 firms received a rating upgrade, putting them in a stronger position to take advantage of the opportunities a recovery presents.

Younger and smaller firms accounted for the greatest number of company downgrades however, these groups also experienced significant numbers of upgrades. These findings demonstrate that the business environment is currently in a state of flux, with some firms well positioned to take advantage of the recovery and others struggling to manage its demands. Cash flow and liquidity are vitally important during a recovery as firms require funds to take on new staff, increase their inventories and invest in their business to meet growing demand. In an environment where access to credit remains difficult for many firms, cash flow becomes even more critical.  Source:  D&B New Zealand

BIIA Newsletter June II – 2010 Issue