Photo: Dom Thomas
More payments from big businesses to small ones will come on time under a new disclosure regime, the government says.
Minister for Small Business Stuart Nash, announcing the Business Payment Practices scheme in Tauranga at midday, said it would require firms with revenue over $33 million a year to publicly report their own payment practices every six months.
This would include late payments and the length of time between being invoiced and full payment. Those who failed to disclose the information would face compliance notices and pentalties.
Nash said small businesses made up more than 97 percent of all businesses in New Zealand, and the move would help ensure they got paid on time.
"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," he said.
"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."
Accounting software firm Xero this month estimated 8 percent of payments for invoices issued by small businesses were more than a month overdue, and delays overall cost New Zealand small businesses about $456m.
Nash said the proposed scheme was similar to regimes in Australia and the United Kingdom.
It would be administered by the Ministry of Business, Innovation and Employment (MBIE). The $33m threshold for "large" businesses was based on criteria in New Zealand's Financial Report Act 2013.