Pay small business bills now, ministers say
Pay small businesses now to help the economy recover.
That’s the message from government ministers to big businesses as the country recovers from the economic shock caused by Covid-19.
The ministers of finance, small business, commerce and consumer affairs are urging big business to embrace prompt payment practices in line with the state sector, which will help improve cashflow for small businesses.
The ministers wrote to major entities asking for 95 per cent of invoices within 10 days.
Finance Minister Grant Robertson said once Covid-19 hit, all government agencies were urged to bring forward the prompt payment target with ‘‘immediate effect’’.
‘‘Improving payment terms is a priority. Paying suppliers faster is an important way to unlock cashflow and productivity benefits, which supports ongoing business sustainability and growth,’’ he said.
‘‘Large employers are already doing a lot to support their people and smaller businesses through the impacts of Covid 19. I know many are trying to improve their payment terms. Together with government, these businesses can help protect jobs.’’
Small Business Minister Stuart Nash said supporting small and medium-sized enterprises (SMEs) is ‘‘central to recovery’’ during Covid-19.
‘‘Late payments impede recovery and force business owners to resort to personal savings,’’ he said. ‘‘Prompt payment terms are another plank in our plan that responds to the immediate impact of Covid 19.’’
New Zealand’s banks have already committed to reaching the target set by ministers.
New Zealand Bankers’ Association chief executive Roger Beaumont said the initiative will help SMEs significantly.
‘‘It makes sense for banks to step up and make sure they’re paying their suppliers quickly,’’ he said. ‘‘The banking industry understands how important prompt payments are to the viability of many businesses, especially at the moment.’’
He said New Zealand banks spent $5.7 billion running their businesses last year. Banks will vary when they will pay invoices but all the association members are committed to paying within two weeks, he said.
Xero has launched improved financial management tool pilots to help SMEs manage revenue, profit and cashflow. The improved tools available to SMEs include e-invoicing, business snapshot and short-term cashflow.
E-invoicing will allow SMEs to streamline their accounts receivable function, while the business snapshot tool enables business owners to compare profit and loss, revenue, expenses and cash balances in real time.
The short-term cashflow tool allows SMEs to project their bank balances 30 days ahead, showing the impact of existing bills and invoices. The pilot is due to be rolled out in two weeks.
Xero chief product officer Anna Curzon said SMEs are facing an ‘‘uncertain future’’ because of Covid-19 and the new tools will help SMEs and advisers make decisions about their financial future.
‘‘One way we can help is by making financial information real-time and insightful, making it easier for businesses to be paid faster and control their cash,’’ she said.