Progress on payment terms and e-invoicing
Minister for Small Business Stuart Nash has congratulated Fonterra for its change of policy around payment terms for small and medium suppliers. The dairy co-operative has adopted a new policy where suppliers whose contracts are worth up to $300,000 per annum will be paid on the 20th of the following month.
“I expressed concerns earlier this year about the tough payment terms faced by some small and medium businesses, after reports some were waiting up to three months for payment. I also raised this directly with Fonterra. The company has now advised that from 1 August it will change its payment terms for smaller suppliers, who make up around 86 per cent of its vendors. I commend Fonterra for the change, which will affect more than 4,000 suppliers.
“I do not generally seek to single out individual businesses but this positive change by Fonterra deserves to be acknowledged. I hope it serves as an incentive for other large organisations to ensure prompt payment of their suppliers and contractors.
“Payment terms can vary widely across the New Zealand economy. A recent media survey found payment terms of major corporates ranged from 14 days following the invoice to 60 days from the end of the month of the invoice.
“The government is also looking at what support it can create for a business climate where prompt payment of invoices is the norm rather than the exception. Timely payments are essential for good cash-flow, and for small businesses, cash-flow is commonly a number one concern.
“Businesses can also ensure they are paid in a timely way by making sure invoices are issued promptly and accurately. Incorrect invoices are a common problem. E-invoicing can make a big difference. It automates many processes and allows incorrect invoices to be instantly bounced back to alert a supplier to an error.
“The Prime Ministers of New Zealand and Australia agreed last month to work on common approaches to e-invoicing as part of the trans-Tasman Single Economic Market agenda. This will build on the mutual recognition of each country’s business identifiers and we anticipate making good progress on this initiative in the coming months,” Mr Nash says.