New Zealand’s Ministry of Business, Innovation and Employment has announced regulations surrounding the new Business Payment Practices Act 2023, which will bring greater transparency to payments made by large entities across the country.
While the Business Payment Practices Act won’t mandate payment timeframes, it will require large businesses (those with revenue and expenditure over set thresholds) to disclose their payment terms and how long they take to pay their bills from July 2024, specifically to small suppliers.
These submissions will be made publicly available on an open register.
The new Act, which was granted royal assent in July 2023, will protect small businesses – which make up over 97% of all businesses in New Zealand and often struggle to deal with payments that are late or delayed.
Large entities – those with both a revenue of NZ$33 million (ex GST) or more, and third-party annual expenditure of NZ$10 million (ex GST) or more – will be required to disclose their payment times and terms, thus allowing members of the public and small businesses to make informed decisions about who they choose to do business with.
Initially, for the first disclosure period, only organisations with a revenue of NZ$100 million or more will need to collect payment information from July 2024, with disclosure due by 31st March 2025.
Organisations with revenue of NZ$33 million or more will need to collect payment information from January 2025.
Disclosures will be due every six months.
This level of B2B payment transparency is expected to encourage larger entities to improve their payment times, in order to mitigate reputational risk.
The New Zealand Business Payment Practices Act 2023 follows the Australian Payment Reporting Act 2021, which was a ground-breaking piece of legislation.
At the time, it made Australia one of the only countries in the world to place a mandate on payment practice transparency, with 34,000 reports lodged to date.
However, there are differences between the two Acts.
New Zealand’s large entities will be subject to different revenue and payment thresholds, different payment metrics, shorter reporting deadlines and reporting of all payments.
For further information, see the Business Payment Practices Regulations 2023