Staff Reporter
Auckland, May 19, 2020
Government Ministers have asked large private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses.
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).
Ten-day cycle
The letter from Ministers has been sent to a cross-section of significant New Zealand enterprises, most of which are among the top 50 NZX Companies.
“We want 95% of invoices paid within 10 working days. Once the impact of Covid-19 arrived on our shores in March 2020, we directed all government agencies to bring forward the prompt payment target with immediate effect,” Finance Minister Grant Robertson said.
Described improved payment terms as a priority, he said that paying suppliers faster is an important way to unlock cashflow and productivity benefits.
“This will support ongoing business sustainability and growth. 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,” Mr Robertson said.
Critical for recovery
Small Business Minister Stuart Nash said that cashflow is central to recovery of our SMEs.
“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 Covid-19. Our government support package is also getting cash out the door to SMEs through interest-free loans, a $3 billion tax refund package, and Wage Subsidy,” he said.
Support packages
Commerce and Consumer Affairs Minister Kris Faafoi said that the request for action on late payment practices accompanies other initiatives to help businesses respond and recover to the impacts of Covid-19.
“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,” he said.
