Better approach to business payments needed

BusinessNZ supports the repealing of the Business Payment Practices Act.

“BusinessNZ is instead working with its large business group to develop a voluntary code to ensure small businesses are paid on a timely basis,” BusinessNZ Chief Executive Kirk Hope said.

Mr Hope says there is a continuing problem of some large companies not paying their suppliers on time, but the Business Payment Practices Act passed last year doesn’t effectively address the problem, and imposes significant compliance costs.

“The purpose of the Act was to set up a public register on which large companies were required to disclose their payment times to suppliers.  Suppliers, largely small businesses, would then be able to see which companies were late-payers and make decisions about whether to do business with them in future.

“However a recent review of a similar business payments system in Australia expressed concerns with the compulsion involved, and found that it has failed to bring a reduction in business payment times by not taking into account the fact that small businesses are not in a position of market strength to be able to pick and choose among prospective large-business customers.”

Mr Hope said these concerns would be greater in the New Zealand context, and a better approach to the problem of late payments would be an industry-led voluntary code for payment times, along with other small business-friendly measures.

22 Feb, 2024

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