Government acts to reduce financial stress for small businesses

The Government’s Business Payment Practices Bill, which will reduce the stress and costs to small businesses of long payment wait times, passed its third reading today.

“This new transparency regime will encourage larger businesses to improve their payment times, which are a significant problem for many small businesses,” Minister for Small Business Ginny Andersen said.

“Long payment terms create cashflow problems for small businesses, because they do not have large financial reserves to tide them over while they wait for large firms to pay their bills.

“Small businesses make up over 97 per cent of all businesses in New Zealand and it’s important they are well supported, particularly following the impacts of the pandemic, Cyclone Gabrielle and other severe weather events.

“The Business Payment Practices Bill will require large businesses to publicly disclose their payment terms and how long they take to pay their bills.

“By introducing more transparency from large businesses on a public register administered by MBIE, small businesses will be able to factor in payment times when they’re looking to do business with them.

“Having access to this information will help small businesses to identify and avoid those firms which are slower to pay than others.

“There will be real reputational risk to large business who refuse to pay their bills on time.

“Not only do late and overdue payments cause uncertainty for small businesses, they also hold back investment and job creation.

“Big businesses often use small businesses as a credit facility, and that’s not ok.  

“The new system will be rolled out to the largest organisations first – those with $100 million or more in revenue. The first reporting period for this new system will begin 10 months after the Bill has passed, and the first disclosures will be made seven or eight months after that.”