New measures to help small businesses get paid on time are set to pay off with the Business Payment Practices Bill passing its first reading in Parliament.
“Timely payment for goods and services is crucial for the financial health of any business. Small businesses in particular are less resilient to poor payment practices, which can cause stress and uncertainty. They are often reluctant to push for prompt payment because of fear of damaging relationships,” said Minister Stuart Nash.
“That’s why we are establishing the Business Payment Practices disclosure regime, which I announced in September. It will require large businesses – those with turnover of $33 million a year – to publicly disclose information on their payment practices, particularly late payments.”
Having access to this information will help small businesses to identify and avoid those firms which are slower to pay than others, the Minister said.
“I’m pleased to be moving forward with a regime that will help to reduce stress for our small businesses, which make up more than 97% of businesses in New Zealand.”
“Not only do late and overdue payments cause uncertainty for small businesses, they also hold back investment and job creation.
“It will also encourage larger entities to improve their payment practices to manage any reputational risks.
“This adds to the support we offer New Zealand’s small businesses and will improve information and transparency around business-to-business payment practices across the economy,” he said.
The Government provided a range of support to Small Businesses during the pandemic, such as the Wage Subsidy, the Resurgence Support Payment, and the Small Business Cashflow Loan Scheme.
Digital Boost was also introduced to support and accelerate the digitalisation of small businesses, with evidence showing that those businesses that are more digitally enabled survived the pandemic in better shape financially.
“We are focused on supporting businesses to regain their footing and continue to grow. This reporting is an important way that we are making it easier for small businesses to thrive and aligns us with the UK and Australia.”
“I encourage business communities to provide feedback to help shape the final regulations and reporting measures for this important regime,” Mr Nash said.