Helping small businesses get paid on time
The Government is introducing new measures with the aim of ensuring New Zealand’s small businesses get paid on time. A Business Payment Practices disclosure regime is being established to improve information and transparency around business-to-business payment practices across the economy, says Small Business Minister Stuart Nash. “Small businesses account for more than 97 percent of all businesses in […]
The Government is introducing new measures with the aim of ensuring New Zealand’s small businesses get paid on time.
A Business Payment Practices disclosure regime is being established to improve information and transparency around business-to-business payment practices across the economy, says Small Business Minister Stuart Nash.
“Small businesses account for more than 97 percent of all businesses in New Zealand. Late and overdue payments have a negative impact, causing unnecessary stress and uncertainty, while extended payment terms can cause real harm – particularly when a supplier has no choice but to accept them on a ‘take it or leave it’ basis,” Nash says.
Large firms (those with revenue over $33 million a year) will be required to publicly report on their own payment practices, particularly late payments, and the length of time between the receipt of invoices and full payment. This information will need to be submitted every six months, which is consistent with similar regimes in Australia and the UK.
“The Small Business Council’s Small Business Strategy identified a number of challenges facing New Zealand’s business communities and the Government is committed to helping,” says Nash.
“Small businesses are less resilient to poor payment practices because they are not as well-equipped or resourced to endure such practices. Many businesses are also reluctant to push for prompt payment because of fear of damaging relationships. Poor payment practices can have flow-on effects for the wider economy, particularly in times of economic uncertainty.
“Large firms will also be required to publish payment practice information on their own websites, bringing in another layer of transparency. Those who fail to disclose payment practice information may face compliance notices and penalties.
“The Business Payment Practices disclosure regime will help small businesses make decisions on who to do business with and encourage larger firms to improve their payment practices to manage any reputational risk,” Nash says.
Meanwhile MYOB spokesperson Jo Tozer says her company whole-heartedly supports this move from the Government.
“Small businesses are responsible for more than a quarter of our nation’s economic output and are rightly talked of as being the backbone of our economy, yet they still face unnecessary and addressable pressures that both limit them from reaching their economic potential and impact their wellbeing.
“Late invoice payments are one example of this, with more than a third of small businesses surveyed in our 2022 Business Monitor expecting late payments from customers to place extreme or quite a lot of pressure on their business this year.
“Important measures like this one, which could alleviate cashflow pressures by addressing poor payment practices, is great news for our SMEs.”
Further consultation with business communities will take place in the coming months on the specific reporting measures.