NZIER research indicates late payments are costing small businesses $456 million a year. Photo: 123RF
Big businesses are being asked to pay their bills promptly to help ease a multimillion-dollar financial burden on smaller businesses.
The country manager of cloud accounting software company Xero told a meeting of large businesses and government representatives to help small businesses by paying their bills within 10 days of receiving them.
Bridget Snelling said recent research by the Institute of Economic Research (NZIER) indicated late payments were costing small businesses nearly half a billion dollars a year ($456 million).
"Small businesses across Aotearoa are doing it tough as they take on a range of significant economic challenges like inflation, high interest rates and wage growth," Snelling said.
"The key challenge for small business is cash flow and late payments is a key contributor to those cash flow loans.
"There are some large corporations that use small businesses a bit like a bank - racking up invoices and delaying repayment for exorbitant amounts of time - sometimes upwards of 90 days and that absolutely has to change."
The trans-Tasman meeting attended by the minister for the digital economy & communications, police, seniors, and small business, was also told further investment in digital services by small business would drive economic growth.
The report indicated a 20 percent increase in the uptake of cloud-based digital tools could increase New Zealand's GDP by $7.8 billion through improved productivity.
"This is a multi-billion dollar opportunity to further digitalise our small business sector and help improve Aotearoa's woeful productivity rates, which are currently below the OECD average," Snelling said.
"Xero and NZIER have outlined clear steps the government can take to help small businesses overcome the barriers to digitalisation.
"In an election year, we think this should be a priority for all political parties."