Driving prompt payments to small businessesCommerce and Consumer Affairs Finance Small Business
Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses.
The Ministers of Finance, Small Business, Commerce and Consumer Affairs have written to more than 40 significant enterprises and banking industry representatives to request they join efforts to support small and medium enterprises (SMEs).
“We want 95 per cent of invoices paid within 10 working days. Once the impact of COVID19 arrived on our shores we directed all government agencies to bring forward the prompt payment target with immediate effect,” said Grant Robertson.
“Improving payment terms is a priority. Paying suppliers faster is an important way to unlock cash-flow and productivity benefits, which supports ongoing business sustainability and growth.
“Large employers are already doing a lot to support their people and smaller businesses through the impacts of COVID19. I know many are trying to improve their payment terms. Together with government, these businesses can help protect jobs,” Mr Robertson said.
“Cash flow is central to recovery for our SMEs,” said Stuart Nash. “The government has already stepped up to take a lead by requiring core departments to pay promptly. Late payments impede recovery and force business owners to resort to personal savings.
“Prompt payment terms are another plank in our plan that responds to the immediate impact of COVID19. Our government support package is also getting cash out the door to SMEs through interest free loans, a $3 billion tax refund package, and the wage subsidy,” Mr Nash said.
“The request for action on late payment practices sits alongside other initiatives to help businesses respond and recover to the impacts of COVID19,” said Mr Faafoi. “We have had to move fast.
“Support takes many forms and a significant package of relief for those with liquidity problems has already been outlined through changes to the Companies Act around debt hibernation and ‘safe harbour’ arrangements for directors who want to keep trading.
“All New Zealand businesses must be given a chance to share the economic recovery,” Mr Faafoi said.
The letter from Ministers has gone to a wide cross-section of significant New Zealand enterprises. Most are in the top 50 on the NZX.