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Calls on Large Businesses to Improve Payment Times for Small Companies

Xero NZ is challenging large businesses in New Zealand to enhance their payment times after research revealed that late payments cost small companies up to NZD 456 million annually.

Bridget Snelling, the country manager of Xero, suggests prompt payment within 10 days of an invoice would help small businesses in overcoming economic challenges and foster growth in New Zealand, as reported in Accountants Daily. 

Small businesses make up approximately 97% of businesses in New Zealand.

Xero’s report, “Cash Flow Challenges Facing Small Businesses” highlighted that almost 40% of payments to small businesses in NZ were late. 

“Small and large businesses, as well as the government, must work together to improve cash flow and digitalisation,” Ms Snelling told Accountant’s Daily. 

Last year, the Business Payment Practices Bill (‘the Bill’) proposed to introduce a system to require organisations with more than $33 million in revenue for two or more consecutive accounting years to disclose their payment practices twice a year.

The bill, which aims to help small businesses get paid faster, was unable to be agreed upon by a Select Committee in April this year, clouding its future. 

The same Xero report revealed late payments were costing Australian small businesses $1.1 billion a year. 

Australian Small Business and Family Enterprise Ombudsman Bruce Billson told the publication technology available today should mean there were no excuses for late payments. 

He suggested tools such as big business rating app in the UK could be a transparent way of encouraging prompt payments to suppliers. 

A Statutory Review of the Payment Times Reporting Act 2020 is underway in Australia. 

It will consider the efficacy of international approaches to improving payment times for small businesses and make recommendations. Submissions closed in March and Dr Craig Emerson is expected to provide a final report to the government by June 30 this year. 

Global consulting firm KPMG in its submission suggested a government-run voluntary 30-day payment code should be established, based on the UK scheme, where entities can be struck off for non-compliance. 

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