Payment scheme boost for small businesses

TAURANGA: More payments from big businesses to small ones will arrive on time under a new disclosure regime, the Government says.

Minister for Small Business Stuart Nash announced the business payment practices scheme in Tauranga yesterday.

It requires firms with revenue of more than $33 million a year to publicly report their 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 penalties.

Mr Nash said small businesses made up more than 97% 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.’’

Accounting software firm Xero this month estimated 8% of invoices issued by small businesses were more than a month overdue, and delays overall cost small businesses about $456 million.

The scheme, similar to regimes in Australia and the United Kingdom, would be administered by the Ministry of Business, Innovation and Employment. — RNZ